UK companies ‘still gripped by poor payments crisis’
Published: 16 February 2018
The amount of money owed to small businesses has halved in the last 5 years, according to Government ministers – but business leaders say the UK is still gripped by a poor payments crisis.
The figures were released as the Government appointed Paul
Uppal to the newly created position of Small Business Commissioner. His role
will be to “drive a culture change in payment practises to ensure small businesses
are treated fairly”. He will help SMEs to resolve payment disputes and to
tackle the unfair practices of larger businesses.
Margot James, Small Business Minister, said: “Over the last
5 years the amount owed to smaller businesses has more than halved from £30
billion to £14 billion.
“The Small Business Commissioner service will empower small
businesses to take action if they are paid late, potentially delivering a £2.5
billion annual boost to the economy.”
Mike Cherry, National Chairman of the Federation of Small
Businesses (FSB), said: “The UK is gripped by a poor payments crisis, over 30%
of payments to small businesses are late and the average value of each payment
is £6,142. This not only impacts on the small business and the owner, it is damaging
the wider economy.”
The appointment of a Small Business Commissioner is the
latest move in a long-term campaign to improve payment practices. This includes
the introduction of the Prompt Payment Code (PPC) in which large companies
commit to paying small businesses on time.
The Government measures are welcome, but many small
businesses still struggle with credit control. This can cause cash flow
problems that prevent small firms functioning effectively and even put some out
Firms need to ensure they monitor overdue invoices and take
early action to ensure prompt payment. A letter from a solicitor is often
enough to secure payment, as your customer then realises that you really mean
business. If that doesn’t work, there are several more steps that can be taken
up to and including court proceedings.
Failure to take early action could lead to cash flow
problems and severe financial difficulties.
Please contact Matthew Sigsworth in our Dispute Resolution
Team if you would like more information about the issues raised in this article
or any aspect of credit control and debt collection.