Cash flow is once again becoming the topic that we are talking about. There is concern that there is indebtedness in companies that took on Government loans and are now starting to have to pay back – and how this is affecting their ability to get other finance into their business. Supply chain issues mean that many smaller businesses are having to pay upfront and wait longer for goods – or are waiting to be paid, and some companies are changing their payment terms to be over 30 days (and we have heard of many facing 120 days!).
Indeed, recent surveys have suggested that at any one time £25 billion is owed by companies with payment terms over 30 days. With rising inflation and the cost of energy going up exponentially – and new NIC rules coming in – businesses are facing many financial pressures.
As an organisation at the heart of the business community, the issue of late payment is becoming increasingly important in these turbulent times. With all the factors listed already – and even issues being raised as we recover and grow out of the pandemic – prompt payment of suppliers has never been more crucial.
I have run my own business in the past so I fully appreciate the stress and anxiety that late payment can cause.
In April 2020 a project entitled The State of Small Business Cash Flow focused on cash flow experiences of self-employed workers and small business owners. Their research revealed that one in seven small business owners have been left unable to pay employees because of cash flow issues. This equates to a huge 2.2 million people in the UK not being paid on time.
Late payments can be detrimental to business growth, especially to micro and small businesses who are the lifeblood of local economies and larger supply chains. Firms having to wait 60 days and longer is no longer acceptable. A small business awaiting a large payment could go out of business before the invoice was paid and because the invoice isn’t paid.
Businesses working together to help stop late payments can greatly improve the economy. It will also engender better business ethics and more profitable businesses so we can all benefit. So, we have signed up to the ‘Pay in 30-Days’ pledge and hope that more businesses will do so too. We think it is of vital importance to the business community and I hope all businesses and organisations in Staffordshire will join the Chambers in supporting this initiative to help keep payments to a timely manner.
You can sign the pledge and receive a folder of digital assets, here.
And if you want more information, please contact our new Finance Advisor, Pam Wallis, who will be joining the Chambers’ Growth Hub team from February.
I am sure that I reflect many people’s relief that Plan B has been lifted and I am really pleased that we can welcome our members back to the Members Lounge – without having to book!
It was fantastic to see the car park full and the rooms stuffed with (careful) people at the event yesterday with Cllr Abi Brown, Matt Hadlington and Victoria Roberts from HS2, and Chris Wheeler from Auditel talking about the economy and future trends that will affect Staffordshire businesses.
The end of work from home guidance has been welcomed by businesses, particularly those based in city and town centres which rely on footfall from office workers. The removal of the requirement for vaccine passports will also be positive for the events sector and night-time economy. However, with infection rates still high, many firms are still experiencing significant staff absences and will be cautious about teams rushing back to the office when that could result in further absences.
Maintenance of testing capacity must also be a priority for Government, with reports of firms unable to access rapid testing at times when they need it. This supply must remain consistent to maintain consumer confidence and avoid unnecessary absences.
If you want to talk to us about any business issues, including funding, you can call our switchboard on 01782 202222 or call the Stoke and Staffs Growth Hub Helpline on 0300 111 8002 or email: info@staffordshirechambers.co.uk
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