Financial advice to SMEs is welcome but more is needed

10 November 2011

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10 November 2011 | Adam Leach

The Forum of Private Business(FPB) has welcomed a UK government campaign promoting financial fitness among SMEs but said taking action against late payment would be more helpful.

The campaign, launched today, will provide advice and support on financial management to small-to medium-sized enterprises (SMEs). While the FPB said that any such assistance is “welcome news”, it pledged to increase pressure on businesses to pay on time.

Alex Jackman, a senior policy adviser at the FPB, said: “It’s high-time the government put the spotlight on the importance of businesses’ finances. Concrete government action in the area of late payment would be even more helpful, and the forum will use the opportunity of a spotlight on financial readiness to lobby for more to be done.”

Last week, a report by transaction processor BACS revealed that the amount owed to SMEs had reached record levels. It found smaller businesses are owed £33.6 billion, a sharp rise from last year’s 30.4 billion, with half of all SMEs currently out of pocket. In addition, the average payment owed has risen to £39,000.

The most common excuse (55 per cent) given to companies seeking to expedite payment was that the invoice has been submitted and is awaiting internal authorisation, while 41 per cent have been told that the “cheque’s in the post”.

Philip King, CEO of the Institute of Credit Management, said: “This latest research reinforces how important it is that all companies, and more particularly SMEs, agree payment terms upfront and work to cultivate a prompt payment culture in all of their business dealings – one that will benefit everyone concerned.”

 


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