Not intentionally looking to jump on the Brexit commentator bandwagon but this is an important point. Both Brexit and the late payment of commercial debts result in lower business confidence but at least one of them is still avoidable.
It’s now certain that the UK will leave the EU but the process of doing so will take years. It’ll involve unravelling the existing partnership and reforging a new partnership with the EU (and the rest of the world).
The end result may turn out ok but it’s the lengthy process of getting there that has the potential to stifle the UK economy.
It’s the uncertainty which business doesn’t like and it’s the uncertainty that could make the UK a less attractive place in which to invest in the coming years. Politicians are already doing what they can to shore up confidence in the UK as a good place to do business but the UK business community also needs to do it’s part.
Having a reputation as a business environment in which invoices are routinely paid late is hardly going to encourage foreign direct investment (FDI) into the UK market especially if easy access to the much larger EU market is no longer the carrot it once was.
TLPD learned recently that tech startups in Finland see both the UK and Germany as good places to expand into when making their first international investments.
In the case of the UK this is because of it’s access to the EU and it’s business friendly environment plus easy access to capital. But how might they view the UK in light of Brexit especially when the alternative is Germany where there is still access to the EU market and the German business culture has a much better reputation for paying invoices on time?
The UK needs to do all it can to present a more business friendly face to the world and now that access to the EU is no longer guaranteed a greater emphasis will be placed on just how good the UK is to do business in.
We need to pay ourselves on time.
One of the economic counter arguments for leaving the EU was that the subsequent fall in sterling means imports will be more expensive and as a result UK consumers will have to start buying theoretically cheaper home grown products. It’s thought that the resulting rise in local domestic investment to service the increase in demand for home grown goods and services will take up part of the slack generated by Brexit thereby softening the longer term economic aftershock.
Regardless of how true that may or may not turn out to be, if UK businesses cannot learn to make money circulate more freely by virtue of simply paying their bills on time, the massive growth in new businesses that the country has seen since 2008 will atrophy ever more quickly. That would affect both (un)employment and tax receipts as well as FDI and overall business confidence, something that the country can ill afford right now.
Now more than ever businesses operating in the UK need to make sure that they pay and are paid on time.
What would you do with an extra £30bn?
At the most conservative estimate there is about £30bn tied up in unpaid commercial debts in the UK. That unpaid debt is putting small firms out of business, stifling growth and costing jobs.
By enabling suppliers to be better informed and thereby securing timely payment of invoices business can reinvest that money and grow. That has always been one of the fundamental principles on which The Late Payment Directory was set up and now that the UK is moving towards more uncertain economic times this is more important than ever before.
While the UK is now firmly on track to leave the EU there is no reason why businesses in the UK cannot work to change their own circumstances in relation to the issue of late payment. Only the very short sighted will see Brexit as a reason to ignore the issue further still.