FSB Report Shows Impact of Poor Business Payment Practices
The Federation of Small Businesses (FSB) published a report in November, detailing the impact of poor business payment practices on businesses throughout the UK. The report found that little has changed over the past few years in terms of improvement in poor payment practices and that businesses are still suffering the consequences of late and non-payments by other businesses.
To be more precise, 30% of payments made to small businesses are late, with an average value of £6,142 owed to small businesses in late payments. Put into perspective, if all payments were made in on time in 2014, this would have saved 50,000 businesses from failing, adding an enormous £1 billion to the economy.
The report also found that it is larger businesses that are more likely to pay SMEs late, with three fifths of SMEs surveyed stated that large private firms, for the most part, paid them late.
In order to tackle this issue, the Government will be implementing new measures in 2017 that aims to ‘increase transparency of payment practices to small firms’. This new measure will mean that large companies will be required to publish their own business payment practices twice a year on a number of aspects, including how quickly they pay their suppliers.
This measure, in my opinion, is a positive step forward in highlighting those companies that carry out poor payment practices against smaller suppliers. I would hope that the fact they would have to highlight their downfalls, that larger companies would be encouraged improve their payment practices; however, I question what consequences would occur if poor payment practices were reported, as this is not something the Government has outlined as yet.
Sources
FSB Report: Time to Act – The Economic Impact of Poor Payment Practice
Boost to small businesses as payment reporting rules unveiled for large firms
If your business struggles with poor business payment practices from customers, please contact us today to discover how we could help your business.
