For small and medium construction companies, balancing cash flow is a delicate art form. The client may not pay within 30 days, or sometimes 60, but your self employed trade worker needs their payment within 14.
With an average UK payment time of 37 days*, this is a story which is very familiar among SME business owners.
For Paul Uppal, the UK Small Business Commissioner, his ambition is “to help small businesses make more informed choices when deciding which larger businesses they are going to trade with”.
Announcing on 7th January that there are plans to release a ‘traffic light’ type warning system by April 2019, designed to assist businesses with trading decisions, the Commissioner spoke to the BBC about the concept;
“We have the power within our office to name and shame. If any large business hasn’t filed their late payment reporting, we’ll definitely be giving them a red.”
“There’s a mix of issues at play, culturally some of theses large businesses have always done this, and we have been set up to challenge that. The truth is, there is also another group who actually use this to massage their own financial figures.”
“By doing this system and keeping the spotlight on this issue we can keep up the pressure. It’s good for the economy as a whole.”
Bruce Hawes, Managing Director of Hawes Building, welcomes this support and believes that showing the industry clear information regarding payment terms can only be a positive thing:
“Construction in particular suffers regularly from the cruel fate of cash flow woes. Material and labour costs require prompt payment in order to deliver projects, whilst inward cash flow is not always as timely. Encouraging a more consistent payment culture across the entire business sector can only have a positive effect.”
To read more about the Small Business Commissioner plans visit: www.smallbusinesscommissioner.gov.uk
*according to research from Lloyds Bank and the SBC
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