Paul Uppal has been named as the new Small Business Commissioner and he will have is work cut out for him. We wish him every success.
Mr Uppal, once a small business owner himself, will have some first hand knowledge of the difficulties faced by small businesses in the UK. In his role as the Small Business Commissioner one of his primary tasks will be to help tackle the endemic problem of late payment within the UK business community.
The scale of the problem is variously estimated to be between £45bn and as much as £255bn in outstanding beyond terms debt. As Small Business Commissioner Mr Uppal will have three problems in relation to late payment that he will need to resolve:
- Reduce the amount of outstanding debt
- Change the culture within in the UK business community in a way that tackles the problem at its root
- Gain the confidence of the UK business community
Taking the last first, as cited in an article on Businessadvice.co.uk 76% of the UK’s small businesses, when asked in a survey by the website, said that they did not think the office of the SBC would make the slightest bit of difference to their payments situation while 21% thought it might have a little impact.
Research conducted by accounting software supplier FreeAgent revealed that 57% of respondents didn’t know at the time that there was even such a position to be filled.
The SBC will have some powers to name and shame in extreme circumstances but in many cases it will act as either a mediator or more likely a signpost to other services that creditors may use to recover money owed to them. Given the scale of the issue in the UK it seems hard to imagine how the SBC will not be inundated with requests for help the minute it is up and running.
Mr Uppal will need a few very quick high-profile wins in order to establish credibility and confidence among the small business community.
Owing to the sheer the scale of the outstanding debt the SBC has a long way to go and Mr Uppal will need all the tools he has at his disposal. However it’s uncertain just how effective those powers will be given the main role of the SBC will be that of an advisory / signposting nature and in a few cases a mediator. While some serious offenders may be “named and shamed” these are unlikely to be many and possibly not enough to cause the larger beasts of UK industry to take fright.
Perhaps his hardest task will be to change the culture in the UK. The Prompt Payment Code, a voluntary scheme managed by Chartered Institute of Credit Management (CICM), has largely proven to be ineffective. The scale of the unpaid debt has vacillated year on year as new data is released but overall the trend has been an upwards one.
The media are fond of portraying the problem as a David and Goliath situation, with David playing the part of the small business creditor and Goliath playing the part of the large multinational debtor.
In truth while some large organisations are wilfully using their suppliers as free banking services to help massage their stock price, small businesses are just as likely to pay their suppliers late (it must be said, partly due to the supply chain cascade effect) and indeed some small business suppliers are as likely to be the architects of their own misery due to lax credit control and invoicing practices.
All of this means that Mr Uppal’s office will have to walk on egg shells while finding a path which strikes a balance that is tough on genuine offenders, supportive of smaller businesses and creditors, effective in delivering results and does not drive large organisations from these shores just as Brexit bites.
In a few months time he may well need a drink.