A new small business commissioner will help small businesses to tackle the increasing problem of unpaid debts and to tackle the nearly £30bn that it costs small businesses in chasing late payments. The move has been widely praised, although groups have said that it needs to be a high profile position and that the help available needs to be well publicised in order for it to prove effective and efficient.
Unpaid debts are a major problem for small businesses. Few have the financial backing to be able to take the hit of missing out on payments that they are due by customers, but taking legal action even through the small claims court not only takes time but can cost money and lost man hours. Eventually, some businesses simply give up on chasing the debt, leaving them with a potentially substantial hole in their finances.
Late payments also cost small businesses millions of pounds in fees and costs, according to the government, who have vowed to prove greater assistance. They have said that there is a need for a culture change that will not only help small businesses deal with late payments but also to prevent practices like supply-chain bullying; the practice of effectively forcing businesses to offer discounts in order to keep business.
Small businesses rely heavily on payments to meet cash flow, and a number of business owners have said that it is seemingly acceptable for larger organisations to routinely pay invoices late, causing them major problems. Other problems have also been raised, including lengthy payment terms, often up to 60 days and even, in some cases, as long as four months. Small businesses are afraid to complain, however, in case they lose the custom of big businesses.
The small business commissioner role is being introduced as a means of helping to tackle these problems. The government has said that the commissioner will be a first point of contact to provide advice on chasing debt and late payments. They will also provide access to mediation, which will cost a fraction of the price of going to court, and they will investigate complaints and report their findings on a regular basis.