As the impact of the first Covid lockdown started to take effect in March 2020, Nationwide Building Society was concerned about the financial risk faced by the small businesses we work with. A group of likeminded colleagues from across Nationwide came together to formulate a plan to see what support we could offer these suppliers.
The group determined that targeting payment to our Micro, Small and Medium Enterprise (MSME) suppliers within 10 working days was a way to do this, supporting the cashflow and survival of these organisations during testing times for the UK’s small business sector.
To understand which businesses needed this support we worked with Dun & Bradstreet to use EU definitions to map our supplier base and understand which businesses were Micro, Small and Medium Sized Enterprises. By identifying these enterprises Nationwide was able to get in touch with them to offer support and update our own systems to flag these suppliers and prioritise their payments.
The change had an immediate impact in terms of Nationwide’s speed of paying MSMEs. Between January and March 2020, before we made the changes, MSMEs were paid on average within 23 working days. After making the change, this dropped significantly, and payments were being made on average within nine days – better than our planned 10 days target.
This meant our smallest suppliers were being paid two weeks quicker than they had been previously, providing vital cash flow at a time when many businesses were struggling with the impact of lockdown.
We were delighted by the feedback from our MSME suppliers. Several small business owners reached out directly to let us know what a positive difference this would make to them, their organisations and their employees.
James Elfer, Founder of MoreThanNow, which looks at behavioural science in the workplace, was one of these small business owners: “It’s not an easy time for small businesses, but that won’t last forever. The memory of these gestures on the other hand, will hang around for a very, very long time. Thanks to Nationwide Building Society and Laura Faulkner and team for going the extra mile.”
As a signatory of the UK Prompt Payment Code, Nationwide is committed to delivering best practice in payments to our suppliers. We intend on continuing with our target to pay small suppliers within 10 working days for the foreseeable future, aiming to go further than the minimum requirements of the UK Prompt Payment Code. Nationwide relies on many small businesses to deliver our services so we want to make sure they are able to not just survive the bad times but also thrive in the future.
The desire to deliver this change and provide this essential support to MSMEs, when they may have been struggling financially, was driven by Nationwide’s social purpose as a building society. This means we don’t simply act to drive profit but instead aim to work in the mutual good to support thriving communities. By working in a proactive way with other businesses we aim to continue building society, nationwide.