SME payment delays may appear as mere fleeting inconveniences, but when aggregated across the UK’s business sector, the financial narrative that unfolds is deeply concerning.
For many, it’s surprising to learn that as of 2022, SMEs were chasing a daunting average of £22,000 in overdue payments.
If rectified, the UK’s economy could potentially see an uplifting boost of £2.5bn.
Tackling the Overdue Payments Dilemma: Government’s Two-Pronged Approach
The UK government’s cognizance of this pressing issue has resulted in a decisive step forward: an expansion of the Reporting on Payment Practices and Performance Regulations 2017.
This isn’t a mere amendment. It paves the way for a robust and transparent payment culture.
The regulations will now include:
- Value-based reporting to outline the exact financial strain of delayed payments.
- A special focus on disputed invoices, ensuring any disagreements don’t get shrouded in ambiguity.
- Targeted measures for the construction sector, addressing the specifics of retention payments.
Complementing this, the Small Business Commissioner is poised to play a pivotal role.
With an enhanced mandate to investigate and release findings, there’s a clear message: transparency and accountability are paramount.
This proactive stance from the Commissioner’s office, coupled with the promise of forthcoming primary legislation, signifies a comprehensive approach to reform.
Practical Tips for SMEs
Reactions to these measures have been largely positive. Yet, there’s a resonating sentiment that for tangible change to unfold, it’s not just about regulatory adjustments.
For SME owners, it’s a call to action on two fronts:
- Digital Transformation: Embracing digital tools can significantly expedite payments and offer more effective cash flow management. Programmes like the Help to Grow initiative and Growth Hubs are valuable resources in this regard.
- Negotiation: Adopt a proactive stance in negotiating favourable payment terms. After all, they should mirror the quality and urgency of the services rendered.
The road to financial stability and predictability for SMEs is multifaceted.
While the government’s latest interventions shine a beacon of hope, the culmination of efforts across the business sector will script the success story.
Small businesses access unsecured, fast funding from Got Capital. As an alternative lender, Got Capital offers financing solutions specifically designed for and catered to the needs of SMEs.
