Managing Your Cash Flow

Small business commissioner: Which way will it go?

5 min read

02 October 2015

David Vine, UK SMB MD for Concur, gives his thoughts on the government's new small business commissioner – detailing what kind of powers they should have and why clout and determination are key.

The Department of Business, Innovation & Skills (BIS) announced in July that it’s setting up a small business commissioner to bring about change in how UK companies do business with each other. 

As of yet, we don’t know who’ll head up this operation, or what their remit will be. One thing is clear though – they must have the power and tools needed to truly help small businesses when dealing with larger companies, ensuring cash flow is not impacted by late payments. 

The spectre of previous underwhelming administrators still looms large, but this time the small business commissioner must be well-armed and ready to make a stand for SMEs. Let’s imagine for a moment how that would look. 

Bargaining with big business 

First and foremost, the commissioner should help small business owners with their negotiations and dealings with larger organisations. It works to ensure big business does not benefit from a stronger position, supporting small business leaders to stand their ground at the negotiating table and tackle complex contracts. Similarly, the provision of a legal network that checks the validity and fairness of deals would prove invaluable – helping small businesses cut through the confusing small print. 

In an ideal situation, the commissioner is a real force for change, particularly when it comes to addressing late payments. There is no shortage of opportunities for the UK government to support small business (reduced rates, for example) but the last thing anyone needs is more red tape. A good start would be for big company executives to play by their own rules when it comes to payments. Without a clear picture of cash flow, small businesses cannot forecast growth or make investments. 

Read more about the subject:

SMBs driving the UK economy

There is a great deal riding on the realisation of this picture. The statistics speak for themselves – at the start of 2014, SMEs employed 15.2m people and had a combined turnover of £1.6tn. 

Responsible for 48 per cent of UK private sector employment, SMEs’ ability to operate successfully directly impacts the health of the whole UK economy. However, it has also been revealed that 47 per cent of small businesses are fighting to stay afloat and that each rely greatly on just a few customers. The failure of even a small number of these has the potential to change the future to one that is far less rosy. 

If the government does not give the new small business commissioner the right powers, the role will end up serving nobody. The resolution of disputes, for instance, could fall to mediators who may well make the process both longer and more expensive. 

Concerns have already been expressed by the small business community that the commissioner could end up like Christine Tacon, Groceries Code adjudicator, who oversees the relationship between retailers and their suppliers. Branded a “window dresser” by critics, she has still not received a response from the government to her request – put forward in 2013 – to fine retailers up to one per cent of revenue for poor corporate behaviour. 

Imagining a brighter future

With small business powering the UK economy, the extra burden of an ineffective advocate could slow down important progress for us all. Equally, a commissioner with clout and determination could genuinely advance the cause of the people who need it most. This in turn would enable small businesses to move forward and invest in technology, staff and travel – critical for supporting Britain’s wider economic ecosystem in the long term.

David Vine is UK SMB MD for travel and expense management software company Concur.