Blackpool small firms group demands late payment action

Mike Cherry from the Federation of Small Businesses
Mike Cherry from the Federation of Small Businesses

The Blackpool-based Federation of Small Businesses is demanding action after research showed late payments are killing off around 50,000 small firms a year.

The FSB, which has its headquarters at Squires Gate, said the poor payment culture is getting worse.

It said it costs the UK economy £2.5bn a year and urged the Government to act to improve matters and make boards of larger companies properly accountable for their payment practices.

The report, Time to Act: The economic impact of poor payment practice, found that existing policy interventions have had no effect on tackling problems around the UK’s poor payment culture in the last five years. Small businesses report that, on average, 30 per cent of payments are typically late compared with 28 per cent in 2011.

It said 37 percent have hit cash flow difficulties, 30 per cent have been forced to use an overdraft and 20 per cent have had hit profits hit by late payments. In 2014, if payments had been made on time as promised, 50,000 business deaths could have been avoided

Mike Cherry, National Chairman at the Federation of Small Businesses, said: “Uniquely, the UK now risks having a business culture where it is acceptable not to pay SMEs on time.

“Based on an imbalance of power between large companies and their small suppliers, this now has a chilling effect right across the economy.

“It’s distressing to hear from our members that in 2016 the average value of each late payment now stands at £6,142.

“Small businesses have to run a tight ship with their cash flow, and as they struggle with increasing business costs on one hand and an uncertain domestic economy on the other. They should not also have to struggle with the stress, time and money required to chase overdue payments from corporate giants.”

The FSB said the Government should devote part of its upcoming Corporate Governance drive to ‘supply chain respect’ and end the delay in appointing the Small Business Commissioner pledged in the Queen’s Speech 18 months ago who should have name and shame powers over late payers.

Paul Foster, FSB Development Manager gave the local perspective. He said: “Most businesses in Lancashire are small and micro businesses, so this issue is one we are very familiar with. Lancashire SMEs contribute a huge amount to the county’s economy, but our report highlights what more they could do if they were not being held back by late payment.”