Britain’s big businesses are being urged to speed up payments to their small business suppliers to help them ride out the coronavirus crisis.
The Small Business Commissioner – an independent public body established by the government to protect small business interests – wants major firms to take measures to protect the cashflow of their smaller counterparts.
Interim Commissioner Philip King is asking all those in charge of supplier payroll to ‘urgently consider’ accelerating invoice payments to the small business community.
Prompt payment could be the difference between keeping a company afloat or seeing it crash – and King’s plea follows a warning by the International Labour Organisation that the pandemic could cost 25 million jobs around the globe if the business community is not properly supported.
King’s call has united a number of UK business groups, and is backed by the British Chambers of Commerce, Enterprise Nation, Federation of Small Businesses, Institute of Directors, IPSE, ICAEW and The Entrepreneurs Network.
King said: “For small businesses, cashflow is the difference between survival and failure.
“Coronavirus has put unprecedented pressure on the UK’s SMEs. When the cash runs out, businesses collapse.
“While the banks and the Budget have set out important action and relief, the reality for small firms is that short term cash flow is still the most important thing.
“We want to urge all businesses to accelerate payments to small suppliers wherever they can. If the invoice is approved and ready for a future payment run, pay it now – rather than wait – and get money into the supplier’s account.
“It may not have occurred to accounts departments to think in this way. But this simple solution is a powerful gesture complementing the support from government and banks. It will also have a more immediate impact and may remove the need to make loan arrangements that will inevitably take effort and time spent outside the core business – and then time to come through.
“I know from experience that speeding up payments is absolutely not beyond the realms of possibility. If payments are already progressing through payment systems, it is possible to change the date. We’d like to see large firms act on this message and pay small suppliers now.”
The government has already announced a £330bn support package for businesses impacted by the crisis, and Chancellor Rishi Sunak has promised ‘we will go further’ if needed.
Small Business Minister Paul Scully said: “The government is doing everything we can to support business through this turbulent time, from offering £2.2bn in grants and a refund for Statutory Sick Pay to our smallest firms.
“But it is vital that businesses also support one another and I would encourage them to heed this call and speed up payments wherever possible.”