Sunday, June 5, 2011

Pay small businesses on time

For many small businesses in the North East the issue of getting paid on time has never gone away.

Looking at the statistics that Experian produce small businesses wait on average 41 days before getting paid for the work they have completed.

This has a massive impact on the cashflow of small businesses with many feeling that they are treated as a bank for bigger businesses. There are still to be many horror tales of some of the really big businesses taking 180 days to pay small businesses.

The last Government attempted to help ameliorate this by introducing the Prompt Payment Code. Announced to much fanfare this was designed to show those larger businesses that took payment seriously.

Since the launch in 2008 there has been no overall improvement in the payment times to small businesses. Some have tried to name and shame the worst culprits but again this has had no impact. Instead many of the larger companies have used it as a demonstration of their corporate responsibility.

What now?

It is apparent with all this that something with greater teeth needs to be introduced. Rather than shifting the blame onto the Institute of Credit Management the Government should be ramping up the pressure on bigger companies.

Until something is proactively done on this the wider Government aims of being the most pro-enterprise Government in history are unlikely to bear much significance.

How should the issue of payment be tackled by the Government? Any small businesses got any good ideas?


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