Late payments are the scourge of businesses throughout the UK and are killing the inherent entrepreneurial spirit of Britain. This is according to Beatrice Bartlay, entrepreneur and founder of specialist employment company 2B Interface, who is calling on the Government address the key issue of late payments head-on in the Budget on July 8th.
"Over the past few years I have been repeatedly calling for action to be taken on late payers including looking at imposing fines on businesses that fail to pay their suppliers promptly. For many small businesses, cash flow is king. If a business does not pay their supplier on time then that has a huge impact on that enterprise, which then ends up acting as paymaster and banker. This simply cannot be fair or equitable and has been a huge challenge throughout the economic downturn," stated Bartlay.
She continued: "What is needed is a thorough review of the legal framework when it comes to late payments. It simply cannot be fair that a small business can end up being the banker for a larger one. There are enough examples out there in the market: from retailers putting the squeeze on farmers, to larger businesses holding their suppliers to ransom over payment terms. Something needs to be done. For small businesses to thrive, they need to focus on cash flow, not act as banker of last resort for bigger enterprises."
Bartlay added: "The current system – which is more driven by guidance than legislation – is one that allows the bigger beasts in the market to call the shots on payment with smaller suppliers. How can that be fair and just? It isn't. And that system is predicated on one blunt 'rule' – everyone should be working to 30 days payment terms. It is clearly not fit for purpose."
"What Britain needs is a legislative approach to late payment and guess what – one not skewed in favour of the 'big' but the 'small'. I would argue that the Government considers a tired payment system – 30 days to pay those sub £1.5m businesses, 60 days to pay the mid-sized sector and 90 days to pay those businesses with a turnover of above £7m. It is simple, easy to enforce and ensures that money flows down through the economy to the hundreds of thousands of small businesses.
"It is this sector in the economy that is proving to be the powerhouse of our economic recovery. But it is still fragile, and small businesses need to be nurtured and not driven to the wall because of cash flow and funding issues. It is in everyone's best interests that this issue of late payments is addressed as it is strangling the economic energy of the British.
Bartlay concluded: "The last Budget did not address late payments enough, however I wait with baited breath to see what the next 12 months will bring. I am confident that with the support of the industry, and the Government, that a change is overdue, and will come. I firmly believe that any supposed weakness can be turned into an advantage, and the damaging effect that late payments have on business should be flipped into helping to support those who are knocked the most."