The ruinous effects of sly late payments

Yvonne Fovargue MP
Yvonne Fovargue MP

Figures released by BACS Payment Schemes Ltd claim small and medium enterprises are owed £26bn across the country.

And worried Makerfield MP Yvonne Fovargue said the research - given that the borough is home to 8,773 smaller firms - suggests they alone could be owed £80.6m.

“This shocking figure of £26.3bn is a result of big clients not paying our small businesses for months on end – and sometimes, just not paying them at all. What’s truly shocking is that an estimated 50,000 businesses fail each year because of these late payments.

“It’s important that everyone understands what these national figures mean for local economies. Late payments hurt every local economy across the country. It’s time for government to step in and make these big clients pay our local business men and women.”

Earlier this year the Wigan Post featured a local firm that had been forced to axe 20 staff because it was owed £200k from a larger firm using delaying tactics not to pay up.

The company boss, who we chose not to name, said: “It’s a clear tactic being used not only against us, to push SMEs to the brink of receivership. They do everything they can to avoid payment and because they’re big firms with legal departments they can get away with it.”

Wigan MP Lisa Nandy said the issue had been raised in Parliament and with business secretary Greg Clark. She said: “Small business owners work incredibly hard to build their companies and provide vital jobs for local people. Government must act to ensure there is a level playing field and prevent this kind of bullying by unscrupulous businesses.”

The BACS estimated 47 per cent of SMEs experience late payments by larger clients.

The Government has said a new Small Business Commissioner will help deal with late payment problems. Speaking last year, the then small business minister Anna Soubry said: “One of the things the commissioner will do is signpost people to the mediation services available when neither side wants to go to court over late payments. Small firms can contact the commissioner with a complaint and he or she will investigate.”