Many small business owners have major concerns about their access to finance over the next few years as many are trying to grapple with late payments of invoices from their customers ...
A recent survey found that up to a third of SMEs would like to borrow funds for growth, however, 40% said that they believed funding would become increasingly difficult, despite only 17% of applications being rejected.
As many Government business support schemes have closed and Bounce Back Loans are due payable, cashflow is tighter than ever. Trade credit and business finance seem to be restricted at a time when business recovery through better supplies and resources is most needed.
There is some good news when it comes to small businesses. Although late payment continues to plague many, many medium-sized businesses have signed up to the Prompt Payment Code meaning they have committed to paying 95% of invoices from small businesses within 30 days. This slashes the current payment time in half, although larger businesses and corporates still have 60-days to pay.
I feel that these changes to PPC and the ability for small businesses to charge interest on late invoices will be important in changing the culture of payments, but as usual, this is no silver bullet!
There needs to be a fundamental shift in mindset in larger businesses that see SME's as partners, not just suppliers. Numbers on a spreadsheet for a large business translate to food on the table for the smallest.
Although funding may be tight for everyone right now, larger businesses can show leadership by supporting their smallest suppliers.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.