New research from commercial credit reference agency Graydon UK, reveals today that last autumn’s Government pledge to ease the cashflow problems faced by small firms through the payment by Government departments of trade invoices in 10 rather than the usual 30 days, is taking longer than expected to take effect.
The survey, conducted during the first two weeks of March 2009, reveals that just 1 per cent of small businesses questioned, which are currently supplying Government agencies, are now receiving payments due to them within the pledged 10 day period. The results go on to show that over a third (39 per cent) of small firms said that they received payment from Government departments within 10 to 30 days, compared to 53 per cent who were paid within 30 to 60 days and 7 per cent after more than 60 days.
With the average payment period in the UK currently standing between 30 and 60 days, these results indicate that the majority of small businesses (60 per cent) consider Government departments no different to others in the market, in terms of payment practices.
Martin Williams, Managing Director, Graydon UK, said: “Whilst I applaud the Prime Minister’s desire to improve the cash flow of small businesses during these economically testing times, it seems that the political apparatus in this country has conspired against him in terms of actioning this undertaking. Clearly the Government’s pledge is taking longer than expected to find its feet, but time is a luxury that many small businesses simply don’t have.”
“Although often overlooked, it’s also a fact that Government agencies are suppliers as well, and like other suppliers, they too are suffering from a slowdown in payments. If they want to be able to consistently pay suppliers within the 10-day period, these agencies must evolve to become more efficient, and learn how to collect their own cash from debtors to speed up the flow of payments. After all, you can only pay out money if you have it coming in.”
Phil McCabe, a spokesman for the FPB, added: "The Government's ambitious target to pay its suppliers' invoices within 10 days is welcome, but has obviously been impossible to achieve. However, a third of the businesses surveyed are being paid within 30 days. This is more encouraging, but it is still not enough.
"It is important that more public sector organisations take the lead and pay their invoices promptly. Every day, the failures of businesses and government agencies to do so decimates many small firms' cash flow in an economic climate where they can least afford it. The Government should be setting a better example so that big businesses feel compelled to follow them.
"The FPB's latest Referendum survey of members shows that 37% are still being paid late. Our most recent economic downturn panel has seen payment terms deteriorate further than any time since its conception in November 2008, and, between August 2008 and January 2009, the amount owed to small businesses had risen from just over £1,000 to £3,600."
This latest intelligence follows on from a previous survey, conducted by Graydon UK in November 2008 and released shortly after the initial Government pledge, which revealed that only 34 per cent of those questioned found Government agencies to be “prompt payers” (within 30 days), with two thirds (66 per cent) instead describing Government payment practices as “slow” or “average” (over 30 days).
Martin Williams added: “When today’s results are compared with those of our November survey, it’s good to see that there has been a small increase in the percentage of companies that regard Government agencies as prompt payers. Clearly something is working, but we must remain patient.”
For further information contact:
Stephen Finch / Giles Robinson
Weber Shandwick Financial
Phone: 0161 238 9401/ 020 7067 0734
Email: firstname.lastname@example.org / email@example.com
Graydon UK Limited
Phone: 020 8515 1400
Notes to Editors:
• Graydon UK’s March 2009 survey questioned 254 UK businesses on their experiences of Government payment practices, 83 of which classified themselves as small businesses.
• Graydon UK’s November 2008 survey questioned 238 small businesses on their experiences of Government payment practices.
About Graydon UK
Graydon UK is one of the leading database information providers specialising in credit risk management and risk assessed marketing lists. The company helps clients reduce the uncertainty of doing business by providing a complete, differentiated and high-quality package of credit risk management services. Graydon provides access to credit information and reports on companies in more than 140 countries worldwide. The Graydon group is owned by Atradius, Coface and Euler Hermes, three of Europe's leading credit insurance organisation. www.graydon.co.uk
In 2008, Graydon UK Managing Director Martin Williams was invited by Philip King, Director General of the Institute of Credit Management (ICM), to join the ICM think tank (an expert panel of 20-25 industry leaders who meet quarterly and act as an influencing force on all issues related to the credit industry in the UK.).That same year, Martin Williams was honoured by Credit Today, after being included on their Credit 100 list of people who have had the greatest impact in the credit industry during 2008.
About the Forum of Private Business
The Forum of Private Business (FPB) is a member-led business support organisation, representing 25,000 small and medium-sized businesses, which in turn employ more than 600,000 people. Member-firms are spread across the UK and cover all sectors of industry.
The FPB was founded in 1977 to fight for fair treatment of private businesses by decision-makers. It continues to lobby today, on issues including late payment, overregulation and unfair competition.
Members have access to a range of specially negotiated money-saving deals on services from asset and invoice finance to telecoms and utilities. www.fpb.org.
Broadcast media – the Forum of Private Business now has ISDN capability and can provide comment, in quality audio, at short notice.
The FPB can also provide journalists with localised and sector-specific case studies.
The FPB is pleased to support the Children’s Cancer and Leukaemia Group (CCLG): www.fpb.org/charity
The FPB now has an online discussion forum, on which people can share information, join the latest debates affecting small businesses in the UK and vote in online polls. Visit the forum at www.fpb.org/forum.
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