So it is with change and transformation: one step at a time to give everyone time to get on board. It’s iterative. It starts with a conversation between people who are passionate about the need for change and have a few loose ideas about how to achieve it. It moves on to a wider conversation, more people join in, the buzz grows and the conversation spreads. You start hearing things from the original conversation coming back to you, as the original idea and the subsequent iterations grow legs.
In the past four years, while I’ve been in the role of the Small Business Commissioner, and looking back as I come to the end of my term, it seems to me the conversation has shifted.
We’ve been talking for decades about ‘late’ payments. However, there’s more than one sort of late payment and they need to be tackled differently. There are overdue invoices, not paid by the agreed date and therefore late. The supplier can charge interest and compensation on these for every day they are overdue.
Then there’s money that takes a long time to get paid because the supplier and the customer, usually at the customer’s behest, have agreed that the supplier will wait that long to be paid (maybe 90 or 120 days). These have historically been lumped in with overdue invoices. We need to call them out separately because they may well, even though the supplier has agreed, be unfair and leave the supplier struggling. Payment in 119 days after the receipt of the invoice when the contract says 120 may well be on time, but is it fair?
We know suppliers are fearful of negotiating better terms, requesting quicker payments, or charging interest and compensation on invoiced amounts that are overdue, because they worry that the offer of work will be withdrawn. There’s always another willing supplier out there happy to accept the terms offered leaving you without work and in danger of becoming unviable. That has a huge impact on the cashflow of the business but also on mental health. Very few business owners sleep at night if they think they won’t be able to pay the bills and their vital employees. The fallout is anxiety and depression, stress, damage to relationships, possible loss of business and home, and ultimately in some cases suicide. There are increasing numbers of organisations springing up to help owners deal with their own wellbeing rather than just questions around how to market the business, increase sales and manage people.
I’ve pushed back regularly against the idea that it really doesn’t matter if payments were overdue because there were lots of cheap options for financing the business while waiting. I rarely hear that now. We have managed to get people including those running bigger businesses to accept that the finance options aren’t particularly cheap if your margins are already tight and you don’t want to put your prices up for fear of losing customers, and small businesses and micros in particular aren’t always able to find someone willing to finance their working capital. If the supplier is successful at finding the necessary funding it may well be at better rates than the credit card, overdraft or loan shark rates, but passing the costs on to the customer means everyone is likely to push the additional costs back up the chain.
There is also a different tone to the conversations around the support needs of small and micro businesses. We may not have succeeded in getting people to stop lumping together under the banner of ‘SMEs’ all businesses that aren’t large. But increasingly I hear people talking about small, micro and sole traders as very different entities with different aspirations, ambitions and levels of capacity and capability. Whether they have one or 50 people they have very different needs for information, mentoring, coaching and funding. One size does not fit all. Nor does one size fit all when it comes to technical tools. Yes, it’s hard to cater for the different needs of 5.56 million small and micro businesses but it starts with that recognition that their needs are different and each is unique.
We’re changing the conversation. I can’t take credit for that although my team and I have been consistent in our messages for 4 years. We can only change the conversation in collaboration with like-minded people in positions to influence thinking. Thanks to all those who have helped us spread the word. There’s still a long way to go but the conversation is changing, the language is more accessible, and the messages are more robust and accompanied by stories they stick. As I step down as Small Business Commissioner my plea is to keep up the momentum please.
