Small firms sceptical of new dispute service as they face later payment
The average delay in receiving payments faced by small businesses has risen to 72 days, according to new research published today by the Asset Based Finance Association (ABFA).
It is a day longer than a year ago and 11 days longer than at the peak of the recession.
“Despite the economic recovery gathering pace, payment delays are getting worse, not better, for small businesses,” said ABFA chief executive Jeff Longhurst. “Delays to payments put enormous pressure on small businesses’ cash flow – they have to meet overheads, tax bills and their own supplier invoices whether they’ve been paid or not. Smaller businesses are particularly vulnerable.”
The government announced an enterprise bill in May that would include a conciliation service to settle disputes between small and large firms.
“Small firms are the backbone of the British economy and it is simply unacceptable when they are made to wait over 60 days to be paid,” said small business minister Anna Soubry.
“The government’s enterprise bill will create a service to help small businesses settle disputes with larger companies, especially over late payment. We will be setting out these proposals soon and asking businesses for their views. This is one of a number of measures we are taking forward to change late payment culture in the UK.”
But the bill, yet to be outlined in full, has met some early scepticism.
“When you rely on one large buyer you’re not going to take them to court or any conciliation service, because then they may see you as a trouble maker and choose to stop doing business with you,” a spokesman for the Federation of Small Businesses told Morning Wire last night.