PM: consultation to get SMEs paid on time

I see that Prime Minister David Cameron has made an announcement about a consultation looking at trying to get small businesses paid on time.

Hooray!

This follows research by YouGov that showed that 85% of small businesses had been paid late at least once in the last two years.

Indeed, apparently, small and medium size businesses (SMEs) are owed £30.2bn according to figures from BACS.

Mr Cameron said: “I am clear that more needs to be done. It's not right that suppliers are not getting paid on time for the work they do and the services they provide and I know that late payment can have devastating effects on our small and medium-sized businesses.”

Apparently a Prompt Payment Code came into practice in December 2008 which was supposed to help small suppliers get payment on time.

Well, it’s the first I’ve heard of it. And I can tell you – it didn’t work.

There is also an EU directive that says business-to-business payments should be made within 60 days (30 days too long in my opinion), but this is flaunted by many.

In my experience it is the bigger companies that are the worst. Small businesses and individuals pay quickly – often within a day or two – but larger firms hold out for as long as they can – and longer.

John Allan, national chairman of the Federation of Small Businesses, welcomed the consultation. "Being paid late or given extended terms can severely hamper many small firms. They simply don't have the same cash-flow buffer as large businesses," he added.