Four weeks into the Small Business Commissioner role and my passion for small businesses is undimmed. If anything, it has been inspired to new heights by the people I’ve spoken to. Everyone has mentioned feeling that we’re on the cusp of change, there’s a desire to make change for the better, and we need to grab the window of opportunity.
What’s the agenda then? Payment processes are number 1. Tackling what’s been dubbed the culture of late payments in the UK needs everyone’s input.
Small business bosses themselves have a job to do. Is it down to good old British reserve that we don’t like to talk about money? I’m as guilty as the next person. Often, we don’t discuss how we’ll get paid before we agree to do the work. Or we accept long payment terms instead of negotiating to get paid sooner. We don’t ask what the invoicing process will be, what information needs to go on the invoice, or who to send it to. We assume the bigger business has all the power and then worry when the payment takes ages to arrive. A payment can’t be overdue if you haven’t got an agreement as to the date it was due. Sort out all the details before you sign the contract. Then if an invoice really is overdue, and you can’t get money you’re owed, we can help.
The truth is that sometimes it’s better for your business to turn work down, because waiting 120 days for payment would make your cashflow impossible to manage.
We need bigger businesses to change their culture and stop imposing long payment terms on small, less powerful suppliers. What would happen if you didn’t get your monthly pay cheque? If you had to wait 120 days to get paid, you’d be in arrears with the mortgage, have to take the kids out of school and the electricity would be on the verge of disconnection. It’s the same for the self-employed or small business suppliers. Do the right thing and make sure your payment processes support payments within 30 days.
We also need the help of the technology and data experts to give us tools to make the whole, contract to payment journey easier. Create us tools that give small businesses more power and confidence so the imbalance between small and big starts to be redressed.