SMEs: Corbyn Labour addresses a serious problem, long sidelined by successive governments
Jeremy Corbyn is addressing the problem plaguing Britain’s small and medium businesses face: late payment.
“Big companies are managing their cash by borrowing – interest free – from their suppliers”
He said they contribute to withholding more than £26 billion from suppliers through late payment, driving 50,000 out of business ever year.
Note that the FSB’s website records:
- a network of regional investment banks which will help smaller firms access the funding they need to expand;
- any company bidding for public sector contracts under a Labour government will be bound to pay its suppliers within 30 days;
- the party will consult on a system of “binding arbitration” to resolve late payments disputes in the private sector
And pledged to scrap quarterly tax reporting for small businesses, describing the proposal as a “burden” and “distraction” that would harm the economy.
The Dutch engineering industry set up an industry-regulated payment routine years ago.
My engineer neighbour said that in his dealings with Holland he found the Dutch engineering industry’s system works well. 30% of the full amount due is paid immediately, and then 30% is paid on completion of the job. The final amount is deemed to be the profit and follow later within a stipulated time frame. This does help to avoid the cash-flow problems afflicting those in this country who often have to wait for three months – and more – before any payment is made.
The 2011 EU Late Payment Directive which aimed to change the late payment culture in the business world and force companies to cap maximum contractual periods at 60 days, amended in 2013 is not implemented by government in this country.
SMEs have not the financial or manpower to carry through prolonged legal action against large companies failing to pay on time – they also fear loss of custom following any such action.
Posted on April 13, 2017, in Economy, Jeremy Corbyn, Labour Party and tagged binding arbitration, EU Late Payment Directive, Federation of Small Businesses, quarterly tax reporting, regional investment banks, SMEs. Bookmark the permalink. Leave a comment.