TURN LATE PAYMENTS TO OUR ADVANTAGE, AND HELP SMES GROW
UK entrepreneur calls to Government to re-invest in Britain’s SMEs by castigating corporate invoice dodgers with VAT levy
Despite continued signs that the economy is improving, more figures – this time from the European Payment Index – are demonstrating the continued scale of the issue of late payments to businesses throughout the UK and Europe. Entrepreneur and SME owner Beatrice Bartlay has re-enforced the suggestion that tax could play an important role in giving legislation around payment terms some real teeth.
Despite previous suggestions by SME leaders and the UK Government of imposing fines on businesses that fail to pay their suppliers promptly, Bartlay, Managing Director of specialist staffing firm 2B Interface, says that those fines should be ploughed straight back into supporting small and young businesses whose cash flow has been negatively affected by late payments.
Bartlay said: “In 2013, I joined both the Government and my peers in agreeing that the repercussions of late payment ought to be financial – indeed, many companies do struggle to enforce ‘interest added credit’ style charges on payments for goods and services rendered that come after the period stated on individual agreed terms. But any reforms to how late payments are treated should consider VAT-style fines – which are re-invested by the Government into our country’s small businesses.
“Fines levied on late payers should be given to those SMEs who are applying to the Government for help through both grants and also Time To Pay, which is a service run by HMRC for those who are struggling to meet tax and National Insurance liabilities,” she explained.
The latest research from the Forum of Private Businesses in April 2013 found that upwards of £30 billion is currently tied up in late payments; made up of monies owed to companies of all sizes, with an average SME spending 130 hours a year chasing them up. Under Bartlay’s recommendation, a 20 per cent levy on this statistic could raise £6 billion in lending and funding for small businesses. The UK Government has recently invested £1.2 billion in helping to grow small and medium sized busineses with the Business Finance Partnership.
Bartlay concluded: “The last Budget did not address late payments enough, however I wait with baited breath to see what the next 12 months will bring. I am confident that with the support of the industry, and the Government, that a change is overdue, and will come. I firmly believe that any supposed weakness can be turned into an advantage, and the damaging effect that late payments have on business should be flipped into helping to support those who are knocked the most.”