Our published RoadMap commits us to various specific goals in 2017. Among them you’ll find a move to make our qualification modules mandatory, a Certificate of Business Banking & Conduct promotion, a National Apprentice Recruitment campaign, a review of NACFB Compliance Services, and the completion of our programme to visit all our members at their offices for a compliance overview.These are targets with fixed dates and we can be held accountable for all of them.
On the subject of sticking to deadlines, late payment continues to be a problem for small businesses. About a quarter of small and medium sized businesses face real struggles due to late payment of invoices. Fully half of all invoices are reportedly overdue, with the average SME owed more than £40,000 from unpaid invoices. One quarter of SMEs recently surveyed said late payments have put them at risk of closure, and the same proportion said that the worst offenders for late payment were large businesses, for whom the balance of power works in their favour.
We do get approached by SMEs quite often, and they are largely start-ups and the smallest businesses which most need the good advice that our brokers are in a position to offer. Speaking generally, such businesses are nervous of making early missteps, of failing to take into account things that would be obvious to a more well-established company. They are looking for handholding and they are looking to build up understanding of the market from a low base-point. Their risk appetite tends to be very low.
This, of course, flies in the face of the theory is that small business can afford to take more risks than large ones because they can react more nimbly when things don’t go as predicted.
To take a simplistic small-scale example, if you made money selling lemonade from a garden stall in the summer months, an unseasonable cold spell might have you selling hot chocolate for a few days instead. But if you’ve made a name for yourself selling two hundred thousand branded cans of lemonade every week, there’s not much you can do to shut down factory output and reconfigure for those few days when lemonade’s not selling. You take the hit, because you’re too big to back away from the punch. For small business, late payment means that when the punch finally reaches them, there’s no way to bounce back.
So perhaps it is inadvisable to encourage small businesses to take risks. Launching a new product, hiring a new team or opening a new office all tie up capital and don’t come with guarantees on return. Like queue-jumping a mule, it’s a gamble where the potential wins are not worth the potential damage.
We need to keep the pressure on larger businesses to pay promptly because while they may fit the stereotype of being slow to act on change, there’s no excuse for being slow to pay invoices. The smallest businesses don’t even have dedicated accounts teams, yet the figures show they tend to be the fastest payers. That’s not because they can dedicate all their time to keeping on top of payments. It’s more likely that they are simply hoping for the same courtesy in return!
