Industry leaders have welcomed the government’s announcement that it intends to crack down on bigger businesses which have poor payment practices towards their smaller suppliers and contractors.
For the first time large businesses could be fined for failing to pay smaller suppliers on time as part of a robust package of measures unveiled by Small Business Minister Kelly Tolhurst.
The move makes company boards accountable for their supply chain payment practices for first time, increases the powers of the Small Business Commissioner to tackle late payments through fines and binding payment plans, and strengthens the Prompt Payment Code.
Small Business Minister Kelly Tolhurst comments: “The vast majority of businesses pay their bills on time, with the amount owed in late payments halved over the last five years. But as a former small business owner, I know the huge impact a late payment can have on the ability of a small business to plan, invest and grow.
“Small businesses are the backbone of our economy and through our modern Industrial Strategy we want to ensure the UK is the best place to start and grow a business. These measures will ensure that small businesses are given the support they need and ensure that they get paid quickly – ending the unacceptable culture of late payment.”
Speaking in response, Federation of Small Businesses National Chairman Mike Cherry says: “Late payments and poor practices are a scourge which leads to the closure of 50,000 small businesses a year. These measures will for the first time see the culprits brought to account.
“Ending late payments and poor practices is not only the right and fair thing to do, it will also spare small firms the financial impact of waiting for the money they’re owed, and instead allow them to invest and grow.”
When it comes to cashflow, SMEs have a tight ship to run. It is therefore essential that business owners receive the specialist support and guidance they need to make effective decisions both now and for the future, as well as access to the right financial products suited to their specific business needs.
Our SME business experts at Beavis Morgan are available to structure your business with cashflow and profit forecasting to measure performance and maximise opportunities. We work to a pre-determined plan, to help you avoid any nasty surprises.
Through our partner businesses, BM Structured Finance and BM Advisory, we are also able to help with sourcing and restructuring debt finance for SME businesses, as well as assisting with resolving issues which can impact on business performance and success, and finding innovative solutions for businesses and individuals in distress.
If you would like to discuss ways of improving the free cashflow in your business, please contact Steve Govey or your usual Beavis Morgan Partner.