Sub-contractors are still being weighed down by late payments and lost business confidence, after the collapse of Carillion earlier in the year. While larger businesses attempt to pick up the pieces, many small businesses are still struggling to keep their head above water. The government has attempted various late payment initiatives, but none have made enough impact to help these contractors.
A new report from the Federation of Small Businesses has revealed that 25 percent of businesses who are in the supply chain experience late payment more than half the time. As a result, these businesses are in financial distress and need either financial aid or government involvement. The FSB has demanded that the government adopt a tougher approach to late payment, splitting up contracts, utilising Dynamic Purchasing Systems and ensuring large government suppliers pay on time.
At the Credit Protection Association, many of our Members have suffered from late payment. Business owners within the construction industry have been hit hardest, with Carillion’s collapse, the increasingly vulnerable supply chain and the more recent bad weather, all chipping away at revenue and business confidence. In order to offset bad economic or geological conditions, businesses should prepare their finances. At CPA our credit management products keep our Members protected and advise them on how to sustain it.
FSB chairman Mike Cherry said: “Healthy supply chains are a win-win for businesses and taxpayers as they create genuine competition, drive productivity, help close skills gaps and fuel economic growth.
“Carillion’s collapse demonstrated the urgent need for Government embark on a positive reform agenda to increase value for money for taxpayers and to minimise the risk of putting too much power in the hands of a few big firms.