Poor payment, most often originating from large corporations at the top of multiple supply chains, was discussed by politicians, civil servants, business and media representatives at summit held in the House of Commons on Tuesday.
The round table meeting followed research carried out by the Forum in conjunction with commercial credit referencing agency Graydon UK, which has shined a light on the scale and extent of the problem. Our survey, which canvassed the views of 500 small businesses, revealed that 51% of companies cite late payment as a problem, 23% indicated that late payment is a serious problem, with a worrying 16% saying they have almost been put out of business as a result.
That’s a lot of businesses affected by this single, central issue. The research clearly underlines the far reaching extent of the problem for small firms across every sector and it simply can’t go on. It decimates cash flow, kills growth and innovation, and ultimately puts firms out of business.
There is also very much a knock-on effect – if you are paid late it is much more likely you will do the same to your suppliers. Frustratingly, many firms only take action once late payment has become a problem. Yet there are steps business owners can take to minimise the impact it has.
We need to do take a number of important actions – first, communicate to business owners exactly what they can do proactively to address late payment, including putting in place robust cash flow management procedures and even simply invoicing properly and on time, and help them by providing the support and services they need to make tackling late payment a standardised business process.
We need to convince large corporations and public institutions to embrace paying their suppliers on time, in full, without imposing no retrospective changes to terms and conditions allowing prompt, proper payment to wash down the supply chain.
These are the aims that are squarely in our sights and we are committed to working with the Government and other agencies in order to achieve them. Tuesday’s meeting was attended by representatives from the Government’s department of Business, Innovation and Skills (BIS), the Labour Party, the Institute of Credit Management (ICM), the Association of Certified, Chartered Accountants (ACCA) and Lloyds TSB Business, as well as ourselves and Graydon UK.
With thought leadership very much to the fore it also included valuable contributions from journalists, including movers and shakers from from the Daily Telegraph, Mail on Sunday, Credit Today, Supply Management, Credit, Collection and Risk Magazine, Economia and Credit Management Magazine.
It’s clear the issue is on the agenda, but there is now a massive need for a sea change in attitudes when it comes to paying up across all sections of business. Now that the UK is officially in a double dip recession, we need best practice more than ever to help lift the economy from the doldrums and a greater focus from Government on helping the SME community be the engine behind real growth.