Craft Focus - October/November (Issue 75)

67 BUSINESS ABOUT FEDERATION OF SMALL BUSINESSES FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at  fsb.org.uk . You can follow us on twitter @fsb_policy and on Instagram @fsb_uk. Incredibly, 84 per cent of our members have told us that they have been paid late, and more than a third have run into cash flow problems because of late payments. With such a huge, crippling impact on small businesses, it’s clear something needs to be done to halt this epidemic plaguing these firms. NAME AND SHAME At the Federation of Small Businesses, we have long campaigned to end the blight of late and poor payment practices. Last year we launched our Fair Pay, Fair Play campaign. The initiative three- point plan sent out a clear message that paying late and supply chain bullying are not OK. We wanted to see large businesses made to assign non-executive directors who would have the responsibility to prevent late payment. We called for payment enforcement to be strengthened by the government, allowing them to fine companies that fail to provide, or provide incomplete Duty to Report on payment practices data. We also campaigned to see the government become a best-in- class client public procurement itself, with no public contracts being awarded to persistent late payers. This is vital to avoid another Carillion, which paid invoices 126 days late before it collapsed. There is no excuse for bigger businesses being paid by the government within five days and then sitting on taxpayers’ money for 126 days, making their suppliers wait for payment due for work done well and on time. These reforms will not necessarily be the silver bullet that will end poor payment practices tomorrow but would certainly go a long way to stamping it out. That’s why, at this year’s Spring Statement, we were pleased to hear the chancellor commit to ensuring that a non-executive director, responsible for the supply chain, is put in place through the Audit Committee of every large business and is to report back through the Annual Report on their progress. Further to that, in June we welcomed the government’s announcement of a raft of new measures, helping to shine a light on these dark practices. Among the new proposals was new powers for the small business commissioner to tackle late payments through fines and binding payment plans, as well as company boards being held accountable to supply chain practices. Earlier this year, the commissioner used his name-and-shame powers for the first time to expose some of those with poor payment practices. FSB had pushed for him to have those powers and worked with him as he’s used them. We look forward to now seeing the commissioner use these extra powers to fine businesses announced over the summer to help. DEVASTATING EFFECTS While FSB’s work with the government to tackle late payments is ongoing, two years ago we decided to launch a new debt recovery product for small businesses and the self-employed in a bid to help them avoid the devastating effects of late payments. The tool allows business owners to register online, load the debtor information and amount owed. A solicitor’s letter is then be sent on their behalf, giving a seven-day deadline for receipt of payment. In the vast majority of cases like these, a solicitor’s letter is all it takes to receive payment. In the unusual event that this doesn’t happen, there are further steps that can be taken. So far, thousands of our members have benefitted from this. During a firm’s development, it’s hard to avoid being stung by late payers. But there are things you can do to help make sure you get paid sooner rather than later. Research is key. Before signing on the dotted line, research potential clients to see whether they have a track record of poor payment. The government requires the biggest businesses to report on their payment practices. These reports are available to search online.  Ambiguity around payment terms should be avoided at all costs. If you expect to be paid within 30 days, make that crystal clear when drawing up agreements. Equally, leave your buyer in no doubt that practices like retrospective discounting, when big firms decide to pay less than agreed simply because they’ve paid on time, won’t be tolerated. It’s also a good idea to send payment instructions and deadlines alongside invoices when they’re issued. Setting up user-friendly online and card payment facilities can also help avoid delays. We can’t hope to change our endemic poor payment culture unless we’re prepared to call out bad practice. The small business commissioner has been tasked with bringing our late payment crisis to an end. As part of his efforts, he’s established a dispute- handling service that provides assistance to small firms that are not being paid on time. If you have been affected by late payments, reach out to the commissioner. The late payment crisis will not climb up the national agenda unless we, as small businesses, are vocal on the issue. And if you want to speak anonymously to someone who understands, contact FSB too. Speaking out on the issues that matter to us is easier when you’re part of a wider community. Our free Connect membership provides access to FSB networking events and allows you to participate in the Big Voice research projects that we use to campaign for change. There is still work to be done before we see the end of late payments for good. We will be continuing to put pressure on the government to make sure these changes come into play to help small businesses and are effective.