The Federation of Small Businesses (FSB), a membership organisation that supports small businesses, has expressed its support for the Labour Party's proposal that would mandate that the biggest companies in the UK disclose their payment practices to their partners and the general public in their annual reports.
Tina McKenzie, the policy and advocacy head of the FSB, was mentioned in news pieces from City AM and Business Leader as saying, “Many small businesses are being held back by a culture that says it’s acceptable to pay them late. The laws are currently slack and supplier interest must be represented at the top of the chain, or this could have a chilling impact on the economy.”
The present government has strengthened the Prompt Payment Code in response to past input from the FSB, forcing larger, more cash-fluid enterprises to pay (SMEs in particular) on promptly and within the original parameters set.
Good Business Pays
Good Business Pays is one social movement that seeks to alter how companies handle payments and finances. On their site, Good Business Pays includes a function that enables users to enter a business' name (their trade name, registered with HM Government), and view their invoicing history on a visual dashboard.
Accounts given to HM Government are used to compile reports. With the Labour Party's intentions to make it mandatory for companies to reveal payment methods in their annual reports, a significant amount of data will be publicly accessible.
This makes it possible for regular individuals to view the typical number of days it takes the company to pay an invoice, as well as the percentage of late payments. A more detailed look at each company's statistics can be found further down the page.
SMEs can use tools like these to research potential business partners and decide whether to move forward, in a well-informed manner.
XFS Limited Support
When your clients are behind on their payments, XFS will advise you on better payment procedures and help your firm navigate the early arrears and late-payment processes.
With clients who are having financial issues, trust must be developed. Businesses can also be exposed!
On the upper end of the spectrum, large companies that are taking on, or have taken on, SMEs as clients should be performing proper due diligence to verify that they can afford to pay in the first place, and are detected as being in financial problems prior to the account defaulting.
Instead of letting the client default without consulting you, it is preferable to negotiate a new agreement in advance.
The key is communication. Only effective communication can keep trust and a positive working relationship - even when customers are experiencing sudden and significant obstacles.
All of the services discussed in this article are provided by XFS Limited, and we can create a solution specifically for your industry and business. Give us a call right away, and we'll give you a free consultation outlining actions.
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