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.

Calls for Sir Alan Sugar to be "Fired"!

It would be hard not follow up yesterday’s post when Enterprise Champion Sir Alan Sugar is squarely in the news again today.

Following his harsh comments about small businesses (see yesterday’s post) on Tuesday night, many business owners were called for him to be “Fired” yesterday.

Although a wave of complaints by business owners might be a nuisance to Gordon Brown, who appointed him as the Government’s Enterprise Champion, the PM is likely to remain unembarrassed, as he has appears to have come through many other potential embarrassments with an enviable display of thick skin.

The Federation of Small Businesses said a number of firms had complained to them about Lord Sugar’s outburst. Chairman John Wright said: “Despite being appointed by the Government to champion business in the UK, Lord Sugar seems to have no grasp of the hard work small businesses do and the role they play in employing six in ten of the country’s private sector work force.

“We urge the Prime Minister to appoint someone with a great understanding of the small business sector.”

Lord Sugar rebutted the argument by saying: “It is unfortunate that my words have been taken out of context.”