In advance of the impending pre-Budget, Edward Rimmer, UK and Ireland chief executive at leading independent invoice financier Bibby Financial Services, commented: “There are no two ways about it – these are extremely challenging times for the UK’s small business community which forms the backbone of the British economy. We are urging the Chancellor to throw a lifeline to small businesses in the forthcoming pre-Budget by instigating a three-point finance action plan.
“We are calling for: (1) further action on the continuing issue of late payment, (2) further steps to regulate the banking system more effectively without increasing the cost of credit to small businesses and (3) implementation of an extension to the credit insurance scheme.
“First and foremost, the issue of late payment refuses to go away. Our experience of working with small businesses has shown that it is the single, biggest issue faced by firms. Clearly, the current late payment legislation which gives small businesses the right to charge interest on late payments is not working. We would like to see the Government take decisive action to stop larger businesses consistently paying invoices late and using smaller firms as an unofficial source of credit. This not only puts good companies at risk but is a massive waste of time and money. It is vital the Government puts a system in place that makes the prompt payment of invoices the norm and renders late payment completely unacceptable.
“Secondly, we are calling for the Chancellor to ensure that his new proposed ‘liquidity reforms’ for the banking industry do not lead to a substantially increased cost of credit to UK businesses. While we strongly support the new liquidity regime, it must not be to the detriment of UK enterprise. We urge the Government to put caps on any increases in the cost of credit when the regulations are introduced and to ensure we will never again have the situation when it is up to the UK taxpayer to stump up the necessary cash to cover the inadequacies of the banking system and help avert financial disaster.
“And thirdly, we are asking the Government to take another look at the credit insurance scheme and increase the level of support to include businesses that have had their credit insurance cover completely withdrawn rather than just reduced. Additionally, we would like to see the scheme, which is due to run until 31 December this year, extended by another six months to help protect as many businesses as possible against the risk of default on payments from debtors.
“The forthcoming pre-Budget is an opportunity for the Government to help the UK’s small businesses struggling to cope with the ongoing downturn. The Chancellor needs to act now if he is to ensure small firms’ survival and if he wants to win the vote of Britain’s small business owners and managers in the next election.”
Posted on 26 October 2009