BBC: Small business commissioner to target late payments

The BBC recently posted an article – ‘Small business commissioner to target late payments‘ which many of you may have seen.

Managing working capital is important for all businesses and particularly so for SMEs. The potential game-changing nature to small firms of winning business with large companies can make it easy to overlook the pain that slow receipt of cash and the risk of overtrading can cause.

It will certainly be interesting to see if the Small Business Commissioner is given the clout to shift the balance of power away from large businesses. Construction is one industry where sub-contractors are regularly squeezed, so has the most to gain from more regulation in this area.

As the article analysis notes, slow payment¬†ruins the cash flow of small businesses, costs time and money chasing debtors and banks aren’t keen to extent overdraft facilities to assist.

Thankfully a solution is offered in the form of Invoice Finance, where a factoring company can accelerate payment from a single invoice to the whole debtors ledger, and variations in between. The facility can include credit control, which often saves money in staffing costs and reduces debtor days due to the more efficient processes the factoring company has in place. Credit insurance is possible too and recommended where business is highly concentrated. Solutions can even extend to the Construction industry, with payments advanced to sub-contractors based on self-certified valuations.