Outlook The Federation of Small Businesses is continually banging on about the time taken to pay invoices submitted by its members. So it might be tempting to dismiss its latest missive – complaining that it is now taking up to four months – as more of the same. It would also be wrong.
Small businesses are caught in a horrible squeeze. The banks have been claiming that they are lending money, with each one of them submitting different numbers illustrating how much they have been prepared to advance. But the problem is that the money they say they want to lend is in the form of loans, while small firms need overdrafts to tide them over while the bigger companies they often serve get around to paying them. These overdrafts are proving hard to secure.
There are remedies available, of a kind. After a certain amount of time the small claims courts can be approached to secure monies owed. But this is time consuming and, as many proprietors will know from bitter experience, can prove to be a double-edged sword. There is nothing to stop big companies which are targeted in this way from paying up and then taking their business elsewhere. Victories secured through this route are all too often pyrrhic ones.
An economic recovery, of sorts, appears to be in process but it is likely to prove slow and grudging – and far too late for many healthy small companies that are fundamentally sound but find themselves unable to continue because of cash-flow problems. This is nothing new, but the question that needs to be asked is why are we still here? Small businesses could be, and should be, the drivers of the recovery. The payment situation means many will not be there to put their hands on the wheel.Reuse content