ALL TRICK AND NO TREAT FOR BRITAIN’S SMALL BUSINESSES THIS HALLOWEEN.

Paul Christensen is the CEO and Co-Founder of Previse and is passionate about Britain’s small businesses. Previse is an instant payments company which leverages AI and machine learning to pay invoices on day-1. 

For small business owners and employees, getting back to work is overshadowed by uncertainty and the looming threat of a second lockdown. Unless Chancellor Rishi Sunak acts now to introduce comprehensive measures, small businesses will suffer.

Yet, Government support for British businesses and workers is scaling down rather than up. Taxpayer money is not limitless and needs to be used wisely but leaving already struggling small businesses stranded would be economic suicide for this country.

British SMEs account for 99.9% of the business population, yet business rates are only frozen for companies with an annual turnover of under £51,000. Many SMEs still have to pay their rates while suffering with slow and late payments from their corporate customers.

Four hundred thousand UK SMEs deliver over £160bn of goods and services to large corporate customers annually. This means that the largest 350 corporates in the UK owe at least £30bn of orders and invoices to SMEs at any point in time. Average payment cycles, as shown in the Government’s payment practice reports, are often 60, 90 or 120 days. It simply doesn’t have to be this way, and solutions exist for corporates to change this quickly, easily and without cost or risk.

In 2019, late payments to suppliers amounted to over £23 billion – this has been exacerbated by the pandemic. In 2020, the majority of SMEs have faced late or frozen payments. Many of the corporates who introduced immediate payments as a response to the pandemic have now reverted back to lengthy payment terms, in some cases asking for discounts from small businesses.

The effects slow and late payments have on small businesses are staggering. Research from the Federation of Small Businesses (FSB) shows that one in ten small companies have already been forced to make redundancies. The FSB also found that one in three small businesses closed due to the pandemic were unsure about their ability to re-open. This is a disastrous state of affairs in a country where SMEs have an annual turnover of £2.2 trillion, a massive contribution to the UK economy.

The UK’s 5.9 million SMEs are going to be left in an even scarier situation come Halloween when Government support has wound down, and employers have to make increasingly difficult decisions.

16.6 million Britons are employed by an SME. One way to protect them is for corporate customers to pay small businesses faster. The government, alongside large corporates, have an opportunity here to come together and help protect the shopkeepers, farmers and tradespeople that have served us throughout the pandemic.

Paying small suppliers faster demonstrates a real commitment to sustainability and strengthens supply chains at very little cost. Every small business deserves the right to day-1 payment. Every corporate can provide it easily. Machine learning makes it possible.

 

Paul Christensen, CEO of Previse, an instant payments company says: “British SMEs provide 60% of private-sector employment and contribute 52% of private sector turnover. Small businesses deserve nothing less than the best to help them navigate the post-pandemic market.

“We have a real opportunity here, to kickstart our economy and create better job security for the millions of Britons employed by SMEs. Now we need to take on the inertia that SMEs face when trying to get invoices paid on time, which sometimes is literally the difference between being able to keep the lights on, or not.

“The Government needs to change the culture of slow and late payments, and technology is the answer. If large corporates paid their invoices faster, small businesses would have desperately needed cash-flow without the tax-payer contributing a penny.

“As the future of the UK economy hangs in the balance, businesses and government must work in harmony to ensure that Britain’s small businesses will survive.”

Decisions will be hard enough for Britain’s small businesses without them being strapped for cash waiting months for invoices to be paid for goods provided. They need Downing Street’s help now more than ever.

Small businesses are the backbone of Britain, they will drive a sustainable economic recovery – they deserve our support. Given the odds stacked up against them, Britain’s high-street and small businesses will be a scary place if we don’t start paying our small suppliers faster.

 

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