- Campaign calls for prompt payment drive to underpin economic recovery
- New online tool gives small businesses information about large company payment performance
- Small Business Minister backs campaign
The Good Business Pays campaign has launched this week to encourage the UK’s largest companies to fast track payments to small suppliers, helping them bounce back from the COVID-19 pandemic and injecting vital capital into the economy.
Small businesses are a growth engine for the UK economy, employing 61% of the private sector workforce (16.8 million) and generating 52% of turnover. Yet 50,000 go out of business each year due to cash flow problems.
With the government roadmap for reopening the economy taking shape, and good progress being made to date, quicker payment of suppliers is now a simple and straightforward way for big businesses to lead the UK economic recovery at this critical time.
Developed initially with the Federation of Small Businesses, the Good Business Pays campaign has been launched with support from the country’s other leading business groups including the CBI, Make UK, BCC, IoD and the Creative Industries Federation. Between them, these groups represent hundreds of thousands of UK businesses. The campaign has been set-up with support from the Banking Competition Remedies (BCR) fund.
Good Business Pays is calling on businesses to sign up and show their support. Small businesses are encouraged to share their experiences (bad and good) of payment practices. Large businesses are asked to adopt a set of pledges committing them to:
- Complying with the Prompt Payment Code principles;
- Exploring digital solutions that enable small supplier invoices to be paid when they need it;
- Providing access to data that helps drive the fast invoice payment agenda for small businesses;
- Making sure payment performance data is published as required by the ‘duty to report’ on large businesses;
- Undertaking a quarterly review of feedback from suppliers on payment performance.
Slow and late payments has been a problem ignored by many big businesses for a long time, but as we recover from COVID-19, consumers are more aware of how important small and local businesses are to the UK economy. Big companies can no longer ignore this.
The solutions to enable faster payment are out there – but the will to fix the problem is not. We hope that, with the support of all the major business institutions, we can change this more quickly by engaging with the good companies that don’t want to hold up payment to their small suppliers. In the next few weeks, we’ll begin to make how fast big companies are paying their small suppliers more visible. Some clearly have the will to do this, and need to be recognised for their good work.Terry Corby, Chair of the Good Business Pays campaign
Lack of cash limits small business growth
The speed with which small businesses are paid can have a significant impact on their ability to survive, thrive and grow. After they have covered the costs of making a product or providing a service, they are then often left waiting months for payment by larger firms. Many small businesses end up paying high levels of interest on loans to plug the gap, wasting time and effort chasing unpaid invoices and turning down orders because of insufficient funds to invest in production or staff.
Research from the Federation of Small Businesses has shown that as many as 50,000 small businesses are lost each year because they are not being paid on time. The Good Business Pays campaign aims to get businesses paying not just on time, but working towards payment when small suppliers need it.
Late payments have long been a scourge, causing financial hardship for smaller suppliers and contractors, and inhibiting their ability to grow. There have been some important steps along the way to improve this, including development of the role of Small Business Commissioner. But more needs to be done to ensure small businesses and the self-employed are paid on time for work done and products provided, and that includes a cultural shift in bigger businesses towards faster payment practices. Good Business Pays is an excellent opportunity to create both pressure and a positive argument for change.FSB National Chairman Mike Cherry
Giving small business the tools to identify late and slow payers
One way small businesses can protect themselves against late payers is by identifying and avoiding them in the first place.
To help small businesses identify customers that pay promptly, a new online tool is being launched by Good Business Pays that makes the average time it takes for companies to pay their invoices calculated using data reported to the Government freely available. Small businesses will be able to see who takes the longest, and which businesses are genuinely improving their payment times.
No business should have to suffer because of delays with being paid, which is why we are taking urgent action to tackle the issue, including by strengthening the powers of the Small Business Commissioner and reforming the Prompt Payment Code. This campaign will help to drive the culture change we need to see, and I encourage businesses to sign up to the Prompt Payment Code to champion responsible payment practices.Small Business Minister Paul Scully