Small Business Commissioner calls for ‘human approach’ to payments
29 May 2020: the government has written to larger accounting firms asking them and their clients to consider the human impact of their actions when it comes to paying invoices from small businesses.
The Small Business Commissioner and Small Business Minister have issued a joint letter to the top two tiers of UK accounting firms, asking that small business suppliers receive payments promptly.
There is “no excuse” for late payment to SMEs, the letter states, and the entire business community should “work together in a spirit of collaboration and partnership”.
Despite the government’s emergency financial support packages for large companies, the move reflects concerns that blanket decisions taken by larger businesses to hold off making payments could result in large swathes of the small business supply chain collapsing.
“At the very least,” continued the letter, “we believe individual conversations should take place to ensure any impact of actions taken are fully understood, and flexibility can be shown where appropriate.”
More humanised approach
Small Business Commissioner Philip King told ICAEW Insights that the communication is around “prevention rather than reaction”.
“We’re trying to make sure businesses are aware of the impact of their actions and transform a corporate approach to a more humanised one. For a big corporate it’s 10 rows on a spreadsheet, but for a microbusiness, it’s potentially food on the table.”
The Office of the Small Business Commissioner also stated that from its many conversations with small business owners, there was “strong evidence” that failing to receive an expected payment will harm well-being and mental health.
In a statement, Small Business Minister Paul Scully commented that the issue of late payment continues to have an impact on smaller firms, and said it was “vital” that all businesses act responsibly and continue to pay suppliers and businesses promptly.
A government statement accompanying the letter said it was “determined to protect lives and livelihoods through the coronavirus pandemic. This includes offering an unprecedented package of support to businesses, including up to £11.6bn in grants to small businesses in England, of which £9.9bn has already been paid out.
“Every business with a rateable value below £15,000 will receive a grant of up to £10,000,” continued the statement. “Eligible larger businesses in the retail, hospitality and leisure industries are eligible to receive up to £25,000 if they have a rateable value above £15,000 but below £51,000.”
The statement also reminded businesses that councils need contact and bank account details for business owners to get the money to eligible businesses.
“Accountants working with small firms whom they believe may be eligible to receive grant funding are encouraged to contact them directly and urge them to reach out to their Local Authority,” read the statement.