The Intermediary – August 2025 - Flipbook - Page 59
SPECIALIST FINANCE
Opinion
Small Business
Strategy
T
here are many
estimations of how
much small to medium
enterprises (SMEs)
are owed in unpaid
invoices – all of them
eyewatering. Most recently, the Centre
for Economics and Business Research
(CEBR) predicted there is £112bn tied
up in unpaid invoices, an average of
£42,000 for an SME.
Over the years, the Government
has tried – some would argue not hard
enough – to address this issue. The
Prompt Payment Code gave businesses
a code of practice to voluntarily sign
up to, and in 2023 the Prompt Payment
& Cashflow Review stipulated public
contracts would only be awarded to
businesses that could demonstrate fair
payment to suppliers.
Unfortunately, it seems neither
went far enough. Nothing is working
to truly shi the ubiquitous nature
of invoice late payment, and not only
does this impact cashflow for SMEs,
but it also puts a strain on business
relationships.
An SME having to chase an unpaid
invoice is, in many cases, risking a
valuable trading relationship, because
the reality of chasing invoices is that
it can – and sometimes does – become
confrontational. SMEs shouldn’t be
put in that position. What’s more, a
business owner chasing money owed
is focused on keeping operations
moving on a day-to-day basis, rather
than looking ahead.
Business Secretary Jonathan
Reynolds is due to publish the Small
Business Strategy in August, part of
which is expected to include a directive
that all large UK companies will be
required to report on how long they
take to pay suppliers.
It is hoped this will unlock working
capital for SMEs experiencing poor
payment practices. The Federation of
Small Businesses estimates this is half
of SMEs in the country – roughly 2.8
million businesses. Being required to
disclose payment practices in annual
reports is undoubtedly a step in the
right direction, but will this be enough
of a deterrent?
PHIL CHESHAM
is managing director of invoice
finance at Time Finance
Bridging the gap
Invoice finance is an under-utilised
solution, and while we see the
challenge of poor payment practices
rumble on, it remains a valuable
funding tool for thousands of SMEs.
Many viable businesses have been
reliant on invoice finance to be able
to access money tied up in unpaid
invoices, and it has saved many
the headache and uncomfortable
conversations associated with having
to chase payment.
At Time Finance, we will always
advocate for any measures which
serve to support SMEs experiencing
poor payment practices, and we fully
understand the issues they face. It’s
been promising to see Government
evaluating new ways to unlock access
to finance. We welcome these steps
forward and await to see if they will
make a meaningful difference. ●
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