Interview with the office of the Small Business Commissioner

Property News, Accountants & Bookkeepers October 3rd, 2019
Interview with the office of the Small Business Commissioner

Neil Cowley, caseworker of the Small Business Commissioner, recently conducted an interview with Arthur. He provided information of the SBC and it’s relationship to the proptech industry:

1) Who is eligible to receive help from the SBC?

The Office of the Small Business Commissioner was launched in December 2017 and is aimed at supporting small businesses resolve disputes around late and unfair payment issues. The service is available to small businesses (which the Enterprise Act 2016 defines as a business with less than 50 employees) who have a payment dispute against their large clients (businesses with more than 50 employees).

2) Which factors have created a culture of late payments between businesses in the UK?

Late payment has been a growing problem in the economy and successive Governments have attempted to tackle the problem over many decades. The delay in payments or the extension in payment terms has been seen as a way to finance businesses and improve company balance sheets. In addition, supply chains have grown more complex. The uncertainty in cash flow created by late payment has disproportionately adverse effects on small businesses and is one of the largest impediments to their growth. It is estimated that approximately 50 thousand small business deaths a year are attributed to cashflow management.

3) Is it too late to change this culture?

Absolutely not, changing payment culture is essential to the UK economy. The Commissioner’s role is not only to support and guide small businesses but also work with large businesses to reinforce the moral and economic argument for improving payment culture. Improving payment can be achieved and the Government is consulting on a range of additional measures including strengthening the powers of the Commissioner and reforms of the Prompt Payment Code.

4) Why is it important for SME’s to report poor payment practice?

Although the Commissioner can use intelligence and data from a number of sources, we need small businesses to report examples of poor payment practice. The Commissioner has the ability to investigate and publish the details of complaints where he believes appropriate and highlight examples of poor payment. To date the Commissioner has published 6 reports detailing poor payment practice and all the large businesses identified have committed to improving their payment practices. Where the Commissioner observes examples of poor payment culture, he will call it out.

5) Why can the SBC be a useful resource for proptech companies in particular?

The SBC is a free service that is available to support and advice small businesses. The SBC will take forward complaints and concerns anonymously if a complainant is fearful of their future trading relationships. Proptech companies have stakeholders across the sector and their services encompass a wide spectrum of activities. The support of the Commissioner’s office can consequently enhance the service they provide.

6) What is the process of dealing with supply chain bullying?

Where a small business believes they have encountered unfavourable payment practice from their larger client they can contact the Small Business Commissioner by email or telephone, the team will work within their remit to support, advise and investigate their complaint if appropriate.

7) What steps can a business take to protect themselves against late payments from larger companies before they are exploited?

We would recommend that small businesses read and fully understand the terms and conditions they sign up to when dealing with their larger clients. They must understand the impact agreed payment terms will have on their cashflow and have knowledge of an escalation or dispute process if things go wrong. Many framework contract agreements vary the late payment remedy from statutory terms, and small businesses need to consider this when they sign a contract. If a small business is unhappy with the terms offered they must be confident to negotiate and challenge them and be prepared to walk away if the terms of the agreement are not mutually beneficial. The Office of the Small Business Commissioner is available to support and advise on available options.

8) How can proptech companies research which other companies have a good history of fair payments?

All large businesses with a balance sheet of £18m and turnover of £36m are legally bound to report their payment practices to Government. Their payment performance can be viewed by visiting the Payment Reporting Practice Gov.UK website.  If businesses don’t meet the requirement to report their payment practice, small businesses should do their own research, enquire across stakeholders about payment history and consider completing a credit check

9) What kind of experience does SBC have to deal with payment disputes?

The SBC has handled 480 cases including 288 payment disputes to date and have helped small businesses unlock £5.3m in late payments alongside publicly identifying 6 large companies for their poor payment practice. The Small Business Commissioner and his team have spoken to over two thousand small business owners and business representative groups gaining an insight into the issues that affect and adversely impact small businesses. The Small Business Commissioner has the ability to level the playing field for small businesses and cut through bureaucracy to engage with senior decision makers in large business to investigate and resolve payment disputes.

10) To what extent has the Enterprise Act 2016 taken steps towards fairer payment times of suppliers?

The Enterprise Act of 2016 has provided a voice for small business and business representatives who will take forward examples of poor payment practice where there is an imbalance of power between a small and large business. The Act provides a framework to promote good payment practice and identify examples of where payment culture can be improved by publishing reports. The Commissioner is committed in his mission to make the UK the very best environment for small businesses to grow and flourish


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