Tag Archive for Late Payment

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SME owners have pumped £12k of their own cash into their businesses

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Originally written by Anna Jordan on Small Business
Entrepreneurs have put almost £12,000 (£11,846.45) of their own money into their businesses on average, according to new research.
Worryingly, 2.6m business owners admit to having concerns about the future – a quarter even believe that their business will go under in the next five years.
These findings come from Business Rewired, a report by Xero looking at the greatest concerns for SME owners in the future. The most prominent worries are:

Receiving payments late54pc

Tax rates for small businesses44pc

Uncertainty of Brexit44pc

Value of the pound40pc

Maintaining or increasing levels of productivity31pc

Increasing cost of importing goods/materials30pc

Cyber attacks/cost of protection against them27pc

Rising cost of rent25pc

Attracting high calibre employees24pc

Cost of running a green/sustainable business23pc

Failure to meet demand23pc

Retaining staff21pc

Increasing cost of exporting products19pc

Inflexible employee contracts19pc

Cost of staff recruitment19pc

Staff going on annual leave17pc

Pressures like these have affected the mental health of more than a third of respondents, with small business owners working an extra nine hours per week on average on top of their standard working hours.
Optimism in the industry
Despite a dismal year for SMEs, experts believe that the emergence of AI will ease the strain on exhausted business owners.
Gerd Leonhard, business futurist and contributor to the report, says:
“Automation is reducing the need

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Ex-small business commissioner blames Whitehall for pushing him out

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Originally written by Timothy Adler on Small Business
Paul Uppal, the ex-small business commissioner, has blamed Whitehall for pushing him out of a role which, he says, is under-resourced and ignored by government.
Uppal, who was appointed late payment watchdog in 2016, has told The Times that his office was met with  “radio silence” from civil servants and ministers over his approach to the job and that his budget was too small to tackle the “huge task” of getting big companies to pay small businesses on time.
>See also: Small Business Commissioner Q&A: Paul Uppal talks about late payments
The former late payment tzar left in October after a disagreement over an alleged conflict of interest related to an unpaid, interim advisory role in another government-backed small business scheme.
Uppal expressed his “shock” and “hurt” at how the Department of Business, Energy and Industrial Strategy handled the issue.
Chancellor Sajid Javid said last week that a successor to Uppal would be found quickly and that the role would be given more teeth.
>See also: How to tackle late payments to your small business
Uppal says that his successor would need more financial and strategic support from government. His last face-to-face meeting with a Whitehall official was back in

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Sajid Javid warns Labour will extend inheritance tax to family businesses

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Originally written by Timothy Adler on Small Business
Chancellor Sajid Javid has warned that Labour plans to stop sons and daughters from inheriting family businesses by charging them inheritance tax.
Currently, family businesses are exempt from 40 per cent inheritance tax when a business is handed down to a family member following the death of the owner.
Labour plans to increase personal inheritance tax; currently, parents can leave property worth up to £325,000 before inheritance tax kicks in.
Sajid Javid said: “Labour has said they’re against the principle of inheritance, that’s why they’re changing inheritance tax for individuals, that’s why they’ve cut the allowance. They have also said they’re going to review taxes – and when they use code words like review, that’s the tax that’s they’re most certainly going to hit.”
>See also: Labour pledges to scrap IR35 rollout to business … and then backtracks
Javid was speaking at a hustings organised by the Federation of Small Businesses (FSB) this week, alongside shadow chancellor John McDonnell and Liberal Democrats deputy leader Ed Davey.
McDonnell, putting his head in his hands, shook his head and repeated, “We’re not.”
However, McDonnell, giving his usual avuncular performance, was frank about Britain needing to pay for investment in infrastructure and society

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Small Business Minister Kelly Tolhurst – ‘Tech is key to solving productivity’

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Originally written by Timothy Adler on Small Business
EXCLUSIVE: Following on from last week’s announcement that the government has awarded £2m to fund projects aiming to boost small business productivity and tackle late payments, Smallbusiness.co.uk grabbed 10 minutes with Small Business Minister Kelly Tolhurst.
Kelly Tolhurst has been Small Business Minister since July 2018, having been the MP for Rochester and Strood since 2015. Before that, Kelly Tolhurst ran her own marine survey business with her boat-builder father.
>See also: Business rates reform key, says Labour business chairman Rachel Reeves
If you had a magic wand, what’s the one thing you would do to boost small business productivity?
Really, there’s no magic wand, there’s a whole range of things we need to tackle and work with the SME market to boost productivity. There are a whole number of reasons and a whole number of measures that decide whether a business is productive or not, so one of the things I’ve been focusing on is around late payments. We know that technology helps productivity. And we know that late payment we know are a big challenge to the small business sector. That’s why we’ve put out the £1m Business Basics Funding round to encourage business to come

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Paul Uppal steps down as Small Business Commissioner

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Originally written by Anna Jordan on Small Business
Paul Uppal has left his role as Small Business Commissioner due to a conflict of interest.
According to The Times, Uppal was told that the business department felt his involvement in establishing a bank redress scheme was a conflict of interest. The department indicated that his departure was not related to performance but to an unspecified breach of terms of his appointment.
Uppal has been helping the banking industry and small business groups to set up the business banking resolution service. The aim of the service is to help SMEs with unresolved complaints to get an independent view of their dispute.
He stepped down on the evening of Friday 11 October.
Getting more powers to help small businesses
The role of Small Business Commissioner was established in 2016 as a mediator of payment disputes between small and large companies. Since taking the position, Uppal has introduced a practice of naming and shaming companies that treat suppliers poorly. He was also going to be given powers to fine companies guilty of late payment and force them to deal with him directly, as well as taking over the running of the Prompt Payment Code.
Mike Cherry, the chairman of the Federation

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4 ways to protect your small business against late payments

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Originally written by Tim Vine on Small Business
Poor payment practices continue to be a widespread issue. In 2018, Dun & Bradstreet found that small businesses were owed an average of £80,141, nearly a quarter more than in 2017 and worryingly, 17pc were owed between £100,000 and £500,000.
These numbers potentially have meaningful consequences for businesses and the wider economy. Overdue invoices can dramatically impact the cash flow of SMEs, as many of these companies lack the deep financial reserves or access to capital which can bridge the gap in payments for large businesses.
Essentially, today’s income is tomorrow’s payroll.
Any delay can have a cascading effect that strains the finances of the supplier and keeps their own vendors from getting paid on time. In fact, 31pc of respondents said that cash flow difficulties were the most serious consequence of late payments and 28pc admitted that they’ve had to delay payments to their suppliers as a result. A quarter have had to cease the supply of goods and services to customers who didn’t pay on time, and potentially lose a business relationship.
‘48pc of SME say that overdue payments put their business at risk of failure’
Perhaps the most disturbing figure uncovered was that 48pc of

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SMEs say late payments are a greater issue than they were a year ago

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Originally written by Anna Jordan on Small Business
A quarter (24pc) of SMEs are reporting that late payments are a bigger issue than they were a year ago.
This figure comes from the latest Independent Chartered Accountants of England and Wales (ICAEW) Business Confidence Monitor, which shows some worrying trends. Six out of nine industries (property, business services, manufacturing & engineering, construction, retail & wholesale and banking, finance and insurance) say that the problem of late payments is growing.
Tim Gardiner, finance director at Panton McLeod Limited, says that large corporates are still notorious late payers, particularly in the construction industry:
“A large part of the problem is where companies have complicated processes for the submission of invoices or claims for payment, combined with a lack of clarity as to who is the contracting company in relation to large scale projects. This arises from intermediaries acting on behalf of utility companies in my experience.”
Around two fifths of businesses report that regulatory requirements and customer demand are also rising problems.
Business confidence is still down
ICAEW’s results show that confidence remains negative this quarter at -10.3. However, this is still higher than Q2 2019 when it was -16.6.
Events like British Steel’s insolvency, evidence of a global shutdown

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Late payers to small business could be barred from public sector contracts

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Originally written by Timothy Adler on Small Business
Some of the biggest Government contractors face being barred from public sector contracts if they fail to start paying small businesses on time.
From September, outsourcers which do not pay 95pc of small business subcontractors within 90 days could be frozen out of public sector procurement, according to Cabinet Office plans. The rule would apply to all contracts worth more than £5m in the £50bn Government procurement sector.
Outsourcers including Kier, Balfour Beatty, Mitie and Capita have fallen below the 95pc threshold, according six-monthly data collected by the business department, and would be excluded from bidding for new contracts.

Percentage of suppliers paid within 60 days%

Kier82%

Balfour Beatty82%

Mitie88%

Interserve90%

Capita90%

Serco96%

G4S100%

Source: company reporting

 
Last week, the Government announced that large companies which pay small businesses late could be fined under new powers given to the Small Business Commissioner. But professional associations and payment platforms say the Government late-payments crackdown does not go far enough. All large companies should be forced to pay small business suppliers within 30 days, they say.
“We expect [all companies] to meet the 60-day target and, if they don’t, they may not be considered for public sector contracts,” small business crown representative Martin Traynor told the Sunday Times.
Traynor

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Government must halve late payments window to 30 days, urge experts

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Originally written by Timothy Adler on Small Business
Government reforms to pressure large businesses to pay small business suppliers on time do not go far enough, say experts.
Small Business Minister Kelly Tolhurst announced yesterday that entire corporate boards will be culpable if large businesses do not pay SME suppliers on time, not just finance directors, as previously mooted.
Large businesses could also be fined for failing to pay small and medium-sized business suppliers on time, as part of a Government crackdown on SME late payments.
The Small Business Commissioner could have beefed-up powers to tackle SME late payments and enforce binding payment plans.
However, the Government has ducked compelling large employers to sign the Prompt Payment Code and to close the late payments window under the code from 60 to 30 days, say professional bodies.
Malcolm Harrison, group CEO of The Chartered Institute of Procurement and Supply (CIPS), said: “More change is necessary. It is important we do not stop there and continue to drive down lengthy payment terms in supplier contracts to ensure SMEs are able to manage their cash flows, to grow their businesses and remain productive.”
Lengthy payment terms
Peter Kubik, partner at accountants UHY Hacker Young, said: “New proposals do not get to

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Small Business Commissioner Q&A: Paul Uppal talks about late payments

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Before becoming the Small Business Commissioner, Paul Uppal used to run his own construction business. He knows all too well how detrimental late payments can be to a small business, having run a company in a sector where the practice is rife. We catch up with him to find out more about his and what
The post Small Business Commissioner Q&A: Paul Uppal talks about late payments appeared first on Small Business.

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