Payments and Cashflow Review

This article appears in our Q1 2023 issue of Finance Transformation Magazine. To download the issue, click here

Being a small business owner can be as challenging as it is rewarding. Delivering a great service or product doesn't guarantee a sustainable business. Success, and survival, depends on cash flow.

This is what exercises business owners daily: is there enough cash to pay wages, buy stock, pay creditors? Is there enough left to live on?

When small businesses are not paid by the due date, or feel forced to accept long payment terms, this hampers business growth and affects their sustainability and possibly their viability. This is a significant problem across the UK, particularly at this critical time for the UK's economy.

The Payment and Cash Flow review will set out the issues from the point of view of small businesses. The aim is to review how businesses are held to account for payment practices and look at which sectors are improving and why others aren't, what the barriers are and what the solutions might be.

The review will also examine business behaviours and small businesses' experiences of late and long payments, including:

· the impact of late payment on business sustainability and growth

· the emotional and psychological impacts on small business owners and staff

· business payment culture and behaviours - contracting practices, liquidity, and cash-flow pressures in small and large businesses

· differences in business characteristics and the effect of these differences on cash flow considerations.

· The aim is also to examine the effect of existing government policies and make recommendations on how they can work together better and where they can be improved, including:

· the role of the Office of the Small Business Commissioner, including its complaints and dispute resolution function

· the voluntary Prompt Payment Code, to which businesses sign up to commit to paying suppliers promptly

· the Reporting on Payment Practices and Performance Regulations, a requirement on large businesses to report and publish data on their payment performance

• the role of public procurement

· the provision for Statutory Interest on outstanding debts for in scope contracts (Late Payment of Commercial Debts Act 1998).

Other questions include:

· how major banks and lenders might help small business manage cashflow effectively, and the barriers to small business accessing financing solutions;

· how technology can help across different sectors;

· and how to improve awareness and take-up of the support and tools available and improve understanding of what support and tools are needed at different stages of business.

Stakeholders will be invited to submit written evidence and/or discuss these matters in meetings and roundtables with Ministers and government officials.

This review will be led by the Minister responsible for small business and report to the Secretary of State for Business and Trade. A conclusions document will be delivered in 2023.

Have your say. When small firms get paid fast and fair and can manage their cashflow #EveryoneBenefits #PayDontDelay