In The Independent this week, a story ran with the headline that ”Small businesses struggle to get paid – and too often the culprits are big businesses and councils”.
Small and medium-sized enterprises are today owed a staggering £39.4bn in overdue invoices, according to recent research conducted by Bacs. Six in ten small businesses are owed late payments and the average small business is currently owed £38,186 in overdue invoices.
The domino effect of late supplier payments means that a quarter of companies are being forced to pay their own suppliers late, with one in five saying that late payments are forcing them to rely on bank overdrafts.
Roberto Moretti, Chief Executive of Oxygen Finance Limited, comments: “As discussed at the LGA Conference Fringe Event, there are a number of converging changes and challenges on the horizon that specifically address the issues raised by the Bacs research. These range from councils having to deal with suppliers electronically (e-procurement and e-invoicing), to the fact that in its report, ‘Building a Responsible Payment Culture’, BIS is pushing for more to be done to improve supplier relationships, based on prompt payment.”
“Another fundamental issue is that paying suppliers’ invoices late is also going to cost councils significantly more. If we count the cost of compulsory calculation and the addition of late payment interest, councils that pay their suppliers late will be looking at 8% above Bank of England Base Rate.”
Roberto Moretti highlights that help is readily available, “Our clients tell us that with Oxygen Finance as a partner, they no longer feel alone in tackling these pressing challenges. We help councils comply with incoming legislation and improve payment performance. The Oxygen solution generates a new income stream for the council and, vitally, provides the resources that councils need to make change happen.”