A pledge by the government to pay the invoices of small businesses within 10 not 30 days will be an ‘uphill struggle’, according to credit control experts.
The government was responding to concern among the small business community about the impact of the credit crunch and its effect on cashflow – the lifeblood of small firms. However, while the pledge is welcome among businesses owners there is scepticism about how and if it can be delivered.
A poll of 238 small businesses conducted by Graydon UK, the credit agency, found that only 34% of them consider the government to be a prompt player.
The rest think the government is ‘slow or average’, meaning it takes over 30 days to pay. In particular, the NHS was singled out by 38% as the worst culprit for slow payment in the public sector.
Martin Williams, managing director of Graydon, doubts the pledge will be met and cites basic practical reasons as the problem.
“This begs the question of how purchase ledger staff will recognise big company invoices from small company invoices,” he said.
“Invoice value can’t be the determining factor, as even big companies can invoice in small amounts for services provided.
“While Gordon Brown’s promise reflects his appreciation of the importance of cash flow to the survival of small businesses in these challenging times, practicalities may inhibit his ability to deliver.”
© Crimson Business Ltd. 2008