The Mission to Make Late Payments a Thing of the Past

"When businesses generate cash, they want to hang onto it. But sometimes they do that for too long and without thinking about the impact on the supply chain"

When businesses generate cash, they want to hang onto it. But sometimes they do that for too long and without thinking about the impact on the supply chain, so says Small Business Commissioner, Emma Jones when PPN CEO, Ellen Leith spoke to her for this edition of the Finance and Procurement People Podcast. 

But on the plus side, the public duty to report transparency is already having an impact on payment terms, Emma says. Couple that with Fair Payment Code promotion up and down the country and "casework" - following up and chasing payments for small firms, the greater the chance to remedy the situation. And with the results of last year's consultation into late payments, to which over 800 responses were received, moving forward into legislation, things will move a stage further. As Emma says; "we're on it!"

So are we turning a corner on late payments?

The situation has been discussed ever since the creation of the Office back in 2017, Emma noted, but all the Officers had was the soft power of encouragement. But large companies have looked at government intentions to legislate and many want to get ahead in anticipation. To some extent that's helped by digitisation in the economy and the evidence shows that time to pay has been reducing over successive quarters. But legislation takes it up to a whole other level of seriousness. Legislation can be a lengthy process, so it may take a year plus to go through the process. But the key point to make to businesses is, don't wait. The time to look at your processes is now.

And what about the Fair Payment Code?

Emma pointed out that the take up has been very good, though mentioned that when she first took on the role of SBC back in June last year, she had ambitions to enrol thousands of businesses. But it takes time for large businesses. Firstly they've got to make the case, internally involve legal, finance and procurement teams, not always an easy ask. But Emma went on to say that in some ways it's more important to ensure some of the largest companies are on the code, not only because of the optics of looking like an outlier amongst peers, but also because of the positive impact these large businesses have deep into UK supply chains. These days there are over 582 companies on the code including Kier, Amey, Barclays, HSCB, Nat West, Lloyds. Emma pointed out one of the Office's next targets is the large supermarkets. 

Where does digitisation and eInvoicing come in?

Digitisation can help in many ways. In fact AI can be used to create contracts and speed up contract management and can be used when SMEs need to scan for any invoice mistakes. Emma pointed out that the Office of the Small Business Commissioner works very closely with companies like Sage, Intuit and Xero who are constantly investing in new tools to help small businesses pay and get paid on time. The eInvoicing mandate is more of a sticky subject with SMEs who tend not to like being told what to do, Emma pointed out. But evidentially, eInvoicing helps to speed up the very thing that they need - being paid and generating growth. The key is that it has to be introduced "with" small business and not "done unto them," Emma said. 

The Office of the Small Business Commissioner

Emma pointed out that she was very impressed by the commitment of the Civil Servants when first taking up the role last year, and inherited a great team. Her proclaimed "small and mighty" team of 14 people sit across Bristol, London and Cardiff, where Emma says the level of institutional knowledge is amazing! With an annual budget of £1.23m to run the Office, Emma points out that she's pleased that they've managed to recoup over £1.5m. In other words, the cost to the tax payer is less than the amount the Office has brought back into the economy.