End to late payment culture could add 3.4m jobs to UK labour market
Britain?s late payment culture is now responsible for a ?266bn hole in small business working capital, according to new research highlighting?its impact on company growth and workforce expansion. A survey of over 1,000 small business owners, by financial services firm Crossflow Payments, asked respondents where they would invest if all outstanding invoices ? representing 15 per cent of annual turnover for the small business community ? were immediately paid. Two-thirds of small business owners would hire up to five new members of staff if big business clients paid up ??bringing a potential 3.4m jobs to the economy. Further responses found over a fifth of business leaders would increase their marketing and sales budgets, while 17 per cent would increase the wages of their workforce. Commenting on the state of Britain?s late payment culture, Tony Duggan, Crossflow Payments CEO, said the time had come for an effective government response. ?Delays in receiving payment promptly from customers is acting as a handbrake [for small business owners], preventing them from making key investment decisions for the future, and ultimately stunting growth. In 2017, it should no longer be the case that businesses face such hurdles,? he said in a statement. The findings also indicated the late payment culture could be worsening. A tenth of respondents said the problem?had been aggravated since the EU referendum in June 2016. ?Brexit is increasing the issue of late payments and reducing investment by SMEs at a time when the UK faces economic uncertainty,? Duggan added. Labour Party leader Jeremy Corbyn recently pledged his party?s commitment to ending the late payment culture damaging smaller firms. Should Labour win the upcoming general election in June, Corbyn would introduce a?30-day deadline for all payments invoiced to small suppliers from large businesses. Further research has revealed low enthusiasm for the government?s incoming late payment tsar, tasked with supporting small suppliers in supply chain relationships. Just two per cent of micro business owners and freelancers believed the small business commissioner could fix the late payment culture. Despite the extent of working capital held up in late payments, Business Advice previously revealed that unfair payment terms could be the real scandal. One small supplier told us that small business owners are often ?bullied? into long payment terms and handed invoice times of up to 90 days. Has the UK?s late payment culture affected your company? Take our short survey and help us fight the corner of small business owners
Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.
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