Make prompt payment a priority for investing in British business, entrepreneur urges next government
Despite efforts to tackle late payments with the Institute of Credit Management’s (ICM) Prompt Payment Code (PPC), entrepreneur and SME owner Beatrice Bartlay is urging the next government to introduce stricter measures to prevent late payments.
While the Prompt Payment Code has value in encouraging and promoting best payment practices between small businesses and suppliers, a recent report by the Federation of Small Businesses (FSB) has found that 79 per cent of its members are not confident about the PPC’s capability of addressing the UK’s poor payment culture, with nearly half of the firms stating that they have waited over 90 days beyond the agreed payment date before they received their money.
Industry organisations including the Public Relations Consultants Association (PRCA) have introduced initiatives to encourage prompt payment, however Bartlay, managing director and Founder of specialist staffing franchise 2B Interface, says that the approach causes “too little detriment to the (typically) large companies using pressure tactics on SME suppliers to take under-priced contracts, just because a brand name logo looks good on the website, and subsequently waiting more than 90 days – or longer – to make payment. To Britain’s small businesses, a bill paid can mean the difference between surviving, or not.”
She added, “Although current measures and advisory guidelines mean well, if they’re broken, who is going to remember it? What we need is government-backed fiscal penalties – adding VAT would be a start – and a real demonstration that for all the talk, the government truly shows some love to the SME, the so-called & lsquo;backbone to the economy.
“The continually updated findings by the FSB ring loud and true to fellow small businesses owners that wait and wait and put the time in to follow up, before being met with another excuse why “I cannot do it” such as that the invoice was lost or misplaced, which any professional will know are excuses often used to delay the process.
“Having said that, the PPC is an important programme that gives signatories, like 2B Interface, an honest voice that they will pay their suppliers on time, while helping to generate awareness of the late payment issue which is prevalent across the UK. But goodwill and demonstrating a responsibility to fellow business owners only gives some people a warm feeling,” she said.
Bartlay commented, “Due to the lack of legislative support to ensure organisations pay on time, smaller businesses often feel that they cannot speak up to those owing them the money because they do not want to damage client relations. Due to reasons like this, it’s completely in the hands of the offending organisation to pay on time, which is why there needs to be more available to defend the position of SMEs. Let’s cut the talk, and put in place hard-hitting measures.
“With greater time, effort and investment from the next government to introduce a fixed legislation that organisations must abide by when working with suppliers and other organisations, I am confident that it will provide that much needed support to SMEs to work effectively, grow and essentially operate well,” Bartlay concluded.