Prompt payment issues putting SMBs at risk

Small and medium-sized businesses (SMBs) are being put at risk by ongoing problems with prompt payment.

A consultation organised by the Government has received various responses from business groups suggesting that more needs to be done to tackle the matter.

The CBI, for example, said that although the majority of businesses stick to fair payment terms with their contractors and suppliers, the national late payment debt still stands at over £30 billion, with the average business owed over £30,000. This clearly puts a lot of pressure on smaller businesses in particular and some are being pushed into administration.

Director for competitive markets with the CBI, Matthew Fell, commented on the findings: “It’s unacceptable that many firms are being held back from growing and creating jobs because they are owed thousands of pounds.

“We want to see companies explain their supplier payment policies clearly on their websites. And we want to see the introduction of a target maximum payment term, with some built in flexibility for more complex contracts.”

In response to the consultation, the CBI advised the Government to demand that all companies publish their supplier payment policies on a 'comply or explain' voluntary basis. It also called for the introduction of a 'target' maximum payment time because a one-size-fits-all approach will not work and certain companies require different options for payment.