Government reaffirmed its commitment to help improve cash flow for UK firms at a meeting with members of the Small Business Economic Forum (SBEF) last week.
By joining forces with small business representatives, government and the SBEF hope to tackle problems smaller businesses are facing in relation to late payment.
Business groups including the CBI, British Chambers of Commerce and British Venture Capital Association have have agreed to advise their members to sign the Prompt Payment Code (PPC), a voluntary scheme that encourages members to make a commitment to pay small suppliers on time.
A recent study by Bacs highlighted that SMEs wait an average of 28 days longer than their original payment terms before getting paid and that the amount owed to small and medium sized companies has risen to £33.6 billion since September 2007. This means around half of all UK small businesses are waiting payment for work carried out.
John Thompson, APHC chief executive commented: “We have known for some time about the problems facing small businesses in regards to late payment, but these shocking figures from Bacs highlight the problem further. The stress of waiting for invoices to be paid is adding to the overall burden of small business owners, many of whom are currently struggling to survive the current economic conditions.
“We are pleased the government is taking steps to resolve this issue but there is still quite a workload ahead to ensure that all businesses are aware of, and sign up to the prompt payment code. The perception amongst smaller businesses is that the Prompt Payment Code is for the larger contractors but this a myth, which needs to be addressed. We look forward to seeing more progress in the coming weeks.”
The government is encouraging all businesses to sign up to the Prompt Payment Code: www.promptpaymentcode.org.uk