East Anglia’s small businesses welcome measures to instigate change in UK’s late payment culture
- Credit: Archant Norfolk
Small businesses across East Anglia have welcomed new measures to ensure the companies they supply are more punctual in their payments.
A new report by the Federation of Small Businesses (FSB), looking at the way smaller firms and the wider economy are affected by poor payment practice, found policy interventions in the last five years have had no notable effect on tackling problems in the UK's payment culture.
Of almost 100 firms in the region which the FSB spoke to for its Time To Act report, 88% say customers pay late, with one in ten saying at least 80% of customer payments are delayed.
More than half (54%) say the average value of each late payment is £1,000 of more, and 21% report an average value of £5,000 or more.
There is a considerable cost to firms' time too, with 59% saying they typically spend at least half a day each month chasing late payments.
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One Norfolk business owner told the EDP he was kept waiting for a payment of almost £200,000 from a large company for more than a year, forcing him to delaying staff acquisitions and investments.
David Howell, FSB Norfolk branch chair, said: 'I cannot understand why small business owners in East Anglia are expected to bankroll larger companies. Like many local companies we rely on prompt payment to pay our wages and other bills.'
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This week small business minister Margot James tabled guidance for big firms to help them address the late payment culture, and new regulations will be introduced in April to ensure big businesses publish details of their payment practices.
The FSB estimates that ending the UK's late payment culture could prevent 50,000 business deaths a year and add £2.5bn to the UK economy.
Salena Dawson, FSB East Anglia regional chairman, said: 'This is great news for SMEs in East Anglia as a first step towards releasing the £26bn that larger businesses across the UK are currently withholding through delayed payments.
'The release of these funds could provide a real boost for the economy in East Anglia, improving small business confidence and the ability to invest in operations and staff.
'Additionally, small businesses tend to invest locally, so it could spark a real wave of investment pulsing through our region.
'I have plenty of members telephoning me exasperated with larger firms who change their payment practices without warning.'
Is your small business affected by late payments? Let us know by calling 01603 772468.
'These companies will use their muscle': one small business' experience
One Norfolk businessman claims his company was kept waiting for a payment of £180,000 from a large client for more than a year.
The company, which supplies specialist electronic equipment, was commissioned to do work for a county council contractor which left much of the debt outstanding for as long as 18 months.
The businessman, who did not want he or his company to be named, said if it was not for support from the county council his company may never have recovered the payments – which amounted to around 20% of its annual turnover.
'We postponed hiring two members of staff until we had the money cleared. It put a bit of a bank on our investment plans too. You cannot potentially lose that much without it having some effect.
'These companies will use their muscle to try to screw you. With this company, it was just incompetence. Had it not been for the county council backing us up, things could have been much worse.
'It is a serious amount of money and we were lucky that we are quite a cash-rich company, but it would have brought down a lot of smaller businesses.'