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Cashflow

Struggling to get paid ? Help is at hand from the Small Business Commissioner

By 13 May, 2021No Comments

Dealing with late payments can have a detrimental effect on micro businesses. Unfortunately, they are often at the back of the queue when it comes to getting paid, feeling it is easier to accept late payment as the norm because they are powerless to challenge the companies paying them late. 

Delayed payment can have devastating effects

These delays are unacceptable, and large businesses need to understand the devastating effects they can have on micro businesses, even if the sum concerned is not very big by the standards of the larger company. For all businesses, cashflow is the difference between survival and failure: when the cash runs out, businesses collapse, and the smaller the business, the less room there is for manoeuvre.

We want to push home the message that it’s okay for micro businesses to ask for help, and it’s right for them to complain when they’re being exploited by their large customers. That’s where my team can help. My office was established under the Enterprise Act 2016 and is part of a package of measures to tackle late payment practices in the business sector across England, Scotland, Wales and Northern Ireland. Based in Birmingham, the OSBC has been set up to provide free help to micro and small businesses in the UK who are facing late or unfair payment practices. We provide:

  • general advice and information to micro and small businesses on matters such as resolving payment disputes;
  • a signposting service to existing support and resolution dispute services through our own website; 
  • a complaints investigation service for late and unfair payment issues between micro and small businesses (50 or fewer employees) and their larger business customers (over 50 employees). We make recommendations on how the parties should resolve the disputes, and how payment practice should be improved. 

Our service is free of charge and at no risk to the complainant – investigations will be treated anonymously if requested. Since December 2017 we have successfully unlocked £7.8m in late payments to small businesses.

Here’s what one business has to say about us:

‘We have received payment for all outstanding invoices and thank the Small Business Commissioner’s office for their assistance. They have been most helpful and we would have no hesitation in using their service again, if the need arises’.  JF Kehoe Installations Ltd

So, what steps should a micro business take if they start experiencing late payments?

Our immediate advice to any micro business owner is to check the terms of their contracts – expected payment terms should be stipulated here. However, if they are not, and the larger business hasn’t specified anything different, default payment terms to micro and small businesses are set at 30 days, from receipt of either goods/services or invoice. 

If you’ve checked your contract and are confident that a payment is now late, the next step should be to contact the finance department of the larger company – their details should be on any purchase order provided, or in your invoicing system. Be polite but firm in any form of communication and try to find out if there is an underlying reason why the payment is late. 

You can assert your right to be paid according to the terms of the contract you signed, and you can also note your right to claim late payment interest – there is an interest calculator on our website you can use to work this total out. 

Make sure all the invoices you provide to your clients are clear, easy to understand, have your payment terms clearly highlighted, and that they’re sent in the correct format to the relevant people. If an organisation needs to receive invoices in a specific way (PDFs, email to a particular address, or even by 48-hour tracked mail on peach paper to a certain office building in Carmarthen), find out this information from their finance team BEFORE you invoice. 

If you have not been able to resolve the issues directly with your customer, then contact OSBC. We will investigate and work to resolve the dispute on your behalf.

Late payments do not have to hinder you opportunities for growth

Micro and small businesses are tenacious, and this is evident in how they have adapted their own unique skills to survive and help others in this pandemic, finding innovative ways to keep jobs open for their staff and serve their customers. As micro businesses move from crisis management to future planning, I want them to know that late payments do not have to hinder their opportunities for growth – my team is ready and waiting to help them deal with unpaid invoices and avoid future payment issues.

Philip King

Philip King

Philip King is the UK Government's Small Business Commissioner. Philip is the author of the Managing Cashflow Guides for government, and the architect of the Prompt Payment Code which the CICM has administered on behalf of the Department for Business, Energy and Industrial Strategy (BEIS). He has worked closely with successive governments in championing best-practice credit management and supporting small business.