Small firms attack late payments

THE region's top Minister has urged big businesses to sign up to a prompt payment code aimed at helping small firms - as the Government's own record on payments came under fire from small businesses.

THE region's top Minister has urged big businesses to sign up to a prompt payment code aimed at helping small firms - as the Government's own record on payments came under fire from small businesses.

Minister for the East of England Barbara Follett said delaying payment caused “untold problems” to struggling firms. But a new report out yesterday claimed payments by the Government and its agencies to small businesses are still late, despite a pledge made more than a year ago.

The Federation of Small Businesses (FSB) said according to its survey, a third of payments by Government and its agencies were late, causing problems for firms. It said it was “shocking” after the Government put in place a prompt payment code.

But the Department for Business said the findings were “totally at odds” with its own data, collected on a monthly basis.

Mrs Follett urged big businesses to follow the example of British Sugar in signing up to the prompt payment code, a Government-led initiative. Only a tiny number of firms in the region have so far subscribed.

Her call was backed by the Suffolk Branch of the Institute of Directors (IoD), the regional director of the CBI and by the East of England FSB.

Most Read

As reported in BusinessEast last week, almost half (48.8 per cent) of small and medium sized enterprises in East Anglia said that late payments were a problem, Mrs Follett said: “Cash flow is the life blood of a small or medium sized business. Delays in payment cause untold problems for struggling companies and hinder others from maximising their potential. This is just what we do not want at the end of a recession.

“That is why I urge all large businesses to sign up to the Government's Prompt Payment Code. Many councils, health authorities and companies like British Sugar UK have already done so and I hope that many others will follow their example. Late payment is one problem companies should not - and if we all pull our weight, need not - have to deal with.

“So, if you want to help businesses in the East of England develop and grow stronger please sign the Prompt Payment Code at and encourage others to do the same.”

In the East of England, 17 of the region's 52 local authorities have so far signed up - nearly 33% - including Breckland Council; Cambridge City Council; Colchester Borough Council; Epping Forest District Council; Fenland District Council; Luton Borough Council, Suffolk County Council and Norfolk County Council.

Three-quarters (31) of the region's 40 health authorities have committed to the code, including Mid Essex Hospital Services NHS Trust, NHS Cambridgeshire, NHS East of England, NHS Suffolk and NHS Norfolk.

To date, just 26 of the region's 512,455 businesses have made the commitment, Mrs Follett said.

Richard Tunnicliffe, regional director of the CBI, said it was supportive of the prompt payment scheme, which it negotiated 18 months ago, and was trying to get its own members signed up. However, he express disappointment that only a third of the region's local authorities had signed up to it, even though others might well be abiding by it.

Paul Winter, chairman of the Suffolk Branch of the IoD, said: “I fully support the prompt payment code and would urge businesses to sign up to it. Delay in payment is a real concern, particularly for smaller businesses, and paying promptly is a way larger firms can assist.”

David Burch, East of England area policy manager for the FSB, said: “We are obviously very pleased at any pressure that can be put on big businesses to pay their small suppliers as quickly as possible but not just big business but government bodies as well.”

He welcomed Mrs Follett's statement as a means of helping small businesses which were increasingly affected by slow payments.

“We are pleased she recognises the problems our members of staff face by not being paid on time,” he said. “Whilst we welcome the fact that round about a third of local authorities in the region have signed up to the code, there's still quite a substantial number who have not done. We would urge them to sign up.”

Regional director of one of The Prince's Charities, Business in the Community, Mike Brophy said: “Business in the Community believes firms that treat their suppliers as partners can help rebuild trust in business accelerate the move out of recession. A key way to do this is to sign up.