Cashflow- or lack of it.

By rotide
Created 05/12/2021 - 16:54

After a career in broadcasting and journalism, specialising in small business, personal finance and consumer affairs, Liz Barclay took over as the Small Business commissioner for the UK in July. "It's a dream job for me because I get to talk to small businesses or people interested in improving the experiences of small business owners all day, every day. There are 5.7 million small businesses made up of sole traders, micro businesses with fewer than 10 employees, small firms with fewer than 50 employees and freelancers in the UK. That's 5.7million stories, each fascinating. The main job of the OSBC is to help them with payment problems such as disputes with bigger customers over late payments or unfair payment practices, but payments are key. Cashflow is still the most important issue for businesses. They should never take their eyes off the cashflow, and payments are fundamental to cashflow management".

The Office of the Small Business Commissioner (OSBC) [1] was set up by government at the end of 2017. Following growing concern about the amount of money owed to small businesses (those with fewer than 50 staff) by large business customers (businesses with more than 50 staff), the establishment of the OSBC saw steps taken to try to reduce this kind of business-to-business debt.

Established under the Enterprise Act 2016, the OSBC has the task of helping small business owners throughout the UK deal with the impact and possible consequences of poor payment practices. Some of the areas that the casework team grapple with on a day-to-day basis include overdue invoices and delays to payments, the imposition of unreasonably long contract terms and sudden changes to payment arrangements resulting from wider commercial challenges.

Through the provision of free information and advice, and a programme of lobbying and influencing large business stakeholders, the OSBC works to keep payment issues at the forefront of UK business discussions.

Currently, the powers that the Small Business Commissioner and their team have access to are focused on helping to manage disputes between small business suppliers and larger business customers. The OSBC can work as an informal mediator between parties in a dispute, as well as offering information about other kinds of financial and legal help. Not all these services are directly linked to government: the OSBC can help small businesses make connections with local and third-sector agencies as well.

The OSBC team of expert caseworkers can provide:

The OSBC has the power to make recommendations relating to these complaints and help with dispute resolution. The OSBC's services are completely free to use, and investigations will be treated anonymously if requested.

Since its establishment four years ago, the OSBC has recovered almost £8million owed to small businesses due to poor payment practices in larger firms.

The other key area of responsibility for the OSBC is the administration of the Prompt Payment Code [2], on behalf of the Department for Business, Energy and Industrial Strategy (BEIS) [3]. The Prompt Payment Code was established in December 2008 and sets standards for payment practices between organisations of any size and their suppliers.

Signatories undertake to:

1) pay suppliers on time, within agreed terms.

2) give clear guidance to suppliers on terms, dispute resolution and prompt notification of late payment.

3) support good practice throughout their supply chain by encouraging adoption of the Code.

The Code was strengthened in January 2021 [4]. Under the reforms, companies that have signed up are obliged to pay small businesses (those with 50 members of staff or fewer) within 30 days - half the time outlined previously. While membership of the Code is voluntary, and there's no compulsion for companies to sign up, some major public and private contractors now look out for signatory status when they procure work.

As Code administrators, the OSBC regularly audits signatory compliance, and persistent cases of non-compliance can be submitted to an independent board. Board members may then choose to suspend a non-compliant organisation from the Code. Equally, if an organisation shows a renewed commitment to the Code's underlying values and carries out an appropriate action plan, they can ask to be re-admitted as a Code signatory.

The OSBC's casework team can be contacted by phone or email. All enquiries will be scrutinised, and an initial response should be provided within 2 working days.

Email the team at enquiries@smallbusinesscommissioner.gov.uk [5], or call to speak to a caseworker on 0121 695 7770.





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