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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Bank lending....will it ever improve?

One of the biggest issues that is facing small businesses in the North East is that of bank lending.

The Project Merlin agreement between the banks and the Government has not produced the magic for small businesses. The lack of small business lending has also been recognised (finally) by the British Bankers Association (BBA). Despite using the usual 'There's not enough demand' line the BBA's own statistics show lending to small businesses has decreased.

The Bank of England's data also points out that lending to small businesses has never really grown over the past two years.

With all this data why isn't the Government ramping up the pressure on the banks to start lending again? The Business Secretary Vince Cable appears to have totally bought the line that the banks can't lend if there is no demand except when his party is looking for a way to differentiate it from the Conservatives.

More targeted action to help small businesses get the lending they require needs to happen now. Waiting for the second set of Project Merlin data will confine too many small businesses to shutting down.

As a start how about the banks outlining what they need from small businesses before denying applications? This would help improve the communication between banks and businesses as well as improving the trust between both.

Small businesses know that the back of a fag packet business plan days have gone but they have no idea what has replaced it. By working together the statistics could be improved and small businesses could continue to grow and prosper.

What do you think? How can we get more lending to small businesses?

Welcome to SmallBizNE

Welcome to a new blog looking at the issues that are impacting on small businesses in the North East of England.

This is a non-party political blog and will look at the issues that are holding back small businesses.

Over the coming months and years hopefully some of the issues that are looked at here will be dealt with by the Government of the day.

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