Though the Prompt Payment Code has been updated ...
Posted by Roger Eddowes on 23/08/2021 @ 8:00AM
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 ...
Small business owners are worrying about late payments as they try to recover from the pandemic!
COVID-19 damaged a lot of businesses and with the threat of further lockdowns still very much a reality, customer demand, inflation and difficulties with recruitment are seen as the biggest barriers to a complete reopening of the economy.
"Many SMEs feel finance may help them unlock their growth potential!"
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 payment culture, but 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.
Until next time ...
ROGER EDDOWES Business Godparent
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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