Since the Office of the Small Business Commissioner opened in December 2017, the whole team has been aware of the worries and concerns of small business owners and freelancers around chasing and collecting payments. Invoices may be overdue, or the contract may have a clause that allows payment to be made 60/90, even 120 days after the invoice is presented. There may be clauses allowing the customer to return goods and withhold payment or to pay you only when they’ve been paid.
It’s a minefield, and one that causes serious mental health problems for many small suppliers. We must change this. We must have fair payments for our small and micro businesses, sole traders and freelance workers. They are the lifeblood of the UK economy and drive innovation and job creation.
Long before I ever dreamt of applying for the job as Small Business Commissioner, the words of my predecessor Philip King stuck with me:
Cashflow is the lifeblood of businesses and, when it runs out, they fail. It’s as simple as that. When employees, key suppliers, or bills can’t be paid then the inevitable outcome is failure unless alternative additional funds can be found, and quickly.
Poor payment practices have a disproportionate effect on small and micro businesses, sole traders and self-employed people and, according to the FSB, are responsible for the failure of approximately 50,000 small businesses a year.
But the impact is not just financial. It’s often also emotional. I’ve talked to thousands of small businesses and heard far too many harrowing stories. People who have real passion for what they do and are living their dream through running a business can be incredibly vulnerable.
Worrying whether a payment is going to arrive or not leads to sleeplessness, mental health issues, relationship difficulties, mood swings and anxiety, breakdowns. Employees of small firms are often long-standing friends and owners feel responsible for them, yet they’re worried about clothing and feeding their own families and know there will be hard decisions to make. Where to turn for help or meaningful advice?
Talking about feelings and concerns is a great form of relief and the sooner we recognise that something isn’t quite right, the sooner we can get support. We’re not alone. Take the plunge and speak to one of the many organisations ready to provide support and advice, even if having the initial conversation might seem overwhelming.
A final word from me:
If any of this sounds familiar, if you’re struggling to get in payments that you’re owed yet you’re reluctant to act, because you worry chasing payments may damage the future business relationship with the customers who owe you money, talk to us. There will be no pressure or judgement. You will find a supportive team ready to listen and help you.