We get an update from Emma on what her Office has been up to in the name of small businesses.
At the end of July, the Prime Minister travelled to Swindon to officially release a plan for small businesses that has five pillars at its heart:
Fixing the fundamentals
Through making it easier for small firms to deal with HMRC and manage regulation, plus addressing late payment (more on this below).
Unlocking access to finance
With extra funding awarded to the British Business Bank for Start Up Loans and growth funding.
Backing the everyday economy
By energising high streets through measures such as High Street Rental Auctions and a commitment to permanently lower business rate multipliers for high street retail & hospitality properties.
Future-proofing business skills
With a focus on AI and digital adoption, plus programmes that offer access to skills, from management & leadership, to apprenticeships.
Opening up opportunities
At home and overseas through supporting greater SME Procurement i.e. more government spend going to smaller suppliers, and export encouragement.
This was all topped off with the launch of a new Business Growth Service directing businesses to local and relevant support.
Key message emerging from the day was the government’s clear commitment to sorting out late payments. This was on the back of research released alongside the plan showing, rather shockingly, that 38 companies go out of business every day due to overdue invoices. Indeed, small businesses spend an average of 86 hours chasing debt, and the cost of this issue to the economy is a whopping £11bn.
Meanwhile, a consultation has been opened looking at potential new measures, and proposed penalties, to speed up payment terms and times, with a particular focus on large companies paying their smaller suppliers. It is considering potential application of automatic interest on late invoices at a statutory 8% above the Bank of England base rate, Audit Committees taking more responsibility for payment performance at a board level, and looking at the use of retention payments in the construction sector.
As someone who has been a founder and company director myself, I know what a thankless task it is to chase clients for monies owed for products and services delivered and I am sure you will agree that if we can address this issue, it will free up precious time and money that can instead be spent on growth tasks.
The consultation is open until 23rd October and has seen a strong number of responses already submitted. Should the measures become law, this will likely take place in 2027/8, allowing time for legislation to be passed and come into effect.
In the meantime, the Office is hard at work in a number of key areas:
- Scaling the Fair Payment Code (https://www.smallbusinesscommissioner.gov.uk/fpc/) to which companies of any size can apply. With its three levels of awards (bronze, silver, gold) it recognises businesses that are doing the right thing and paying suppliers on time. We are signing up more household names to the Code, as well as companies that are strategic suppliers to government
- Responding to cases. For times when small businesses continue to struggle with a late paying client, we have a busy casework team that can investigate complaints and aim to get payments made and disputes resolved
- Leveraging digital technologies. At an individual firm level, there is plenty of evidence to show small firms that adopt digital tools, such as cloud accounting, get paid quicker. At a macro-economic level we are kicking off test activity with the Centre for Finance, Innovation & Technology, to explore how the UK’s lead in Open Finance (opening up of a businesses’ transaction data) can make money move faster through the system, and so into the hands of small firms. AI is also having a positive impact as business owners and account departments set prompts to chase late invoices and let the tech do the work
If we get this right and money moves faster, it will free up founder time to focus instead on tasks like hiring, exporting, innovating and selling, which is what businesses do best.
