FreeAgent also found that a quarter of Britain’s micro-firms have had to wait between three and six months, while 10% had a client that had never paid them at all.Of course, this is not just an issue relating to micro-firms. All SMEs are susceptible to these despicable practices, particularly from massive companies who treat payment terms with total disrespect and put the livelihoods of entrepreneurs and their employees at risk. Collectively the issue of late payment costs small businesses around £2.5 billion a year, which is a massively scary figure. Official numbers reckon a third of payments to small businesses are late, with the average value of each payment at £6,142. This has led to 20% of small businesses running into cash flow problems due to late payments. It’s worth pointing out that the government is doing something about it and is standing up for small firms. While it appears to be all-consumed by its balls-up of Brexit, every now and again, the government is actually applying itself to something else that’s important to the country.
In particular, in December 2017, the business secretary Greg Clark created a role called the small business commissioner.The role was launched to ensure fair payment practices for Britain’s 5.7 million small businesses, support them in resolving payment disputes with larger companies, and to bring about a change in payment practices between businesses and across sectors. The person holding the role is Paul Uppal and he, and his office, are proactively supporting businesses to recover outstanding debt. To date, they have helped small firms get paid more than £400,000, which is a small step in the direction of the couple of billion they’re owed! I do hope the commissioner can make a difference, not only in getting small businesses paid but also in helping to change the late payment culture where SMEs are at the mercy of big customers. After all, cash is the substance that oils the wheels of industry, but if the money isn’t poured into the system it will simply grind to a halt.
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