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Gloucestershire Business News

Time to get tough with the late payers

Many small firms doubt that the powers given to the first ever Small Business Commissioner will be enough to tackle the problem of late payments.

Business Secretary Greg Clark has appointed Paul Uppal to the newly-established post to help small businesses resolve disputes with larger businesses and drive a culture change in payment practices.

Mr Uppal and his team will provide general advice and information to small businesses. He says his priorities will reflect his 20-year experience as a small business owner in the real estate sector where he saw how even sound businesses could struggle when faced with a culture of late payment by customers.

Late payments are often critical in the survival of small businesses, especially when dealing with large national companies.

However, new research, from cloud accounting software provider FreeAgent, has found that only two per cent of micro-businesses in the UK believe the Government and the Commissioner will take the issue seriously.

Only half of all invoices sent in the UK last year were paid on time, according to FreeAgent, who reviewed data from a sample of its 50,000 plus customer-base and analysed hundreds of thousands of invoices.

Instead, micro-business owners would like to see much more stringent penalties put in place for those who don't pay invoices. Seven in ten micro-business owners polled said they wanted to have the opportunity to secure compensation from late-paying clients, while 59 per cent said they wish to see a code of conduct being implemented and adhered to.

However, just 29 per cent believe naming and shaming of late-payment offenders would be of use.

Ed Molyneux, CEO and co-founder of FreeAgent, said: "It's good news that the Government has finally appointed a Small Business Commissioner, with the specific remit of dealing with the late payment problem faced by micro-businesses.

"However, the reality is likely to be that Mr Uppal will actually have limited power to punish companies who routinely pay late, aside from just naming and shaming them."

"Micro-businesses and their owners are acutely affected by late payments. Unlike bigger companies who can often wait to be paid, micro businesses need to get paid promptly to keep their business in the black.

"We need to see a complete cultural shift when it comes to paying invoices so that these types of smaller businesses are not put at risk."

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