SMEs are still struggling to obtain payment – are the government doing enough to help them?
New government proposals are set to see a levy imposed on companies which fail to pay suppliers promptly, which could help towards the economy gaining some much needed momentum.
It is reported that business secretary Vince Cable has commissioned a review into how feasible such plans – similar to a system in Sweden – would be.
SMEs being overlooked by larger companies
Currently, SMEs are struggling to obtain money they are owed and the long, drawn-out process of reclaiming makes their task even more difficult. Failing to secure payments which they are owed can lead SMEs to fall into company administration and involve them facing additional problems.
Payments body Bacs revealed that SMEs were owed an average of £31,000 in overdue payments in April.
Steven Beahan, a Partner and specialist in SME legal issues at Irwin Mitchell insists the latest government move could be just what is required.
“The economy has shown some signs of improvement in recent months and it is very important these are built upon. A late payment levy could play a vital role in that, which will ensure fair treatment of suppliers and also the creation of a healthy business environment and attitude across the UK,” he said.
“Late payments can be an incredibly difficult issue for SMEs, as cashflow can be particularly key for growing businesses which are reliant on prompt payment to continue with their plans for growth and stability.
The latest moves mark a small step for many SMEs, although it is definitely a step in the right direction.
Business recovery specialists
Moorfields Corporate Recovery has a range of experience offering advice and guidance to SMEs on financial issues, which includes assisting directors, lenders and creditors in such matters.
By Phil Smith