Ministers to Review Late Payments to Small Businesses
Earlier this month, a government review into tackling late payments for small businesses was announced while at the same time they urged large companies to pay smaller suppliers promptly.
It’s recognised small businesses routinely suffer late payments from businesses they supply or service, with cash flow problems being a very real risk that can prevent them from growing. Most small businesses have small balance sheets that can’t accommodate long payment terms or delays within their cash flow cycle. Significant time and resources are then spend chasing late payments.
The Payment and Cash Flow Review will look at existing payment practices and measures to make sure small firms are not ripped off by larger clients. With over £23.4 billion currently owed in outstanding invoices to UK businesses, this is a big concern.
The review will consider progress made in specific sectors in tackling late payment and will include an in depth examination of current payment reporting regulations and the Prompt Payment Code. The statutory review of the Small Business Commissioner will also help ensure the UK has the right arrangements in place to support small businesses.
For those this issue impacts, take some time to reflect on where you are and what could happen in the next few months. Plan ahead for a range of scenarios. Cash flow and business planning in uncertain times may appear difficult but there are some practical steps you can take to minimise potential disruption to your business.
- review budgets, set realistic targets for 2023
- get employee input on reducing costs/maintaining revenues
- review & flowchart processes: sales, order fulfillment, shipping
- ensure relationships with customers are solid
- review products/services – eliminate those unprofitable or not core
- explain strategy and get buy-in across the business
Let’s Talk
Talk to us about cash flow planning for the next few months, we can help produce estimates for a variety of scenarios. Let’s Talk.
