Government launches ambitious small business plan supporting fast payments and growth
The UK government has come out with one of the most comprehensive small business plans in the last couple of decades. One of the promises of this plan is to crack down on late payments and to provide a boost to small companies.
It’s a part of a wider “Plan for change”. The plan will cut the red tape and hopefully lead to growth. In this article, we’ll go over this plan and how it’s supposed to relieve small companies that are dealing with cash flow pressures.
The cost of late payments
Late payments are one of the biggest problems small businesses are dealing with. It’s estimated that British businesses lose about £11 billion every year due to late payments. The research also shows that about 38 businesses are closed every day because of it.
Things have somewhat changed with the introduction of crypto exchanges, such as the ones written about by CryptoManiaks. The use of blockchain allows traders to automate payments and thus avoid late payments. However, since as much as 60 percent of small businesses report that they were paid late, government action was needed.
How the crackdown will work
There are several measures that the government will institute in order to stop late payments. These include:
- The introduction of maximum terms. Payment terms will be legally capped at 60 days before falling further to 45 days. It’s one of the shortest terms in the world.
- The Small Business Commissioner will have the power to investigate companies that consistently delay payments and to levy fines against them.
- Audit committees of large companies will be responsible for overseeing late payments at the board level. This creates a great sense of accountability for the companies.
- Late payers will be forced to add interest to overdue invoices. That way, there will be no incentive to withhold payments.
Unlocking growth
The plan also injects about £4 billion into the economy and does so strategically to stimulate certain industries and areas, mostly focusing on small and family-run businesses. The measures include:
- 69,000 start-up loans. These are paired with mentoring support programs to help new entrepreneurs.
- An additional £3 billion for the British Business Bank, used for lending to small businesses.
- £340 million in regional equity investment. These will focus on businesses in an underdeveloped area.
- A new Lender Code of Conduct. It will ensure better treatment for business owners who offer personal guarantees for government-backed loans.
Cutting red tape and building capacity
Experts such as those from CryptoManiaks have long been writing about the challenges small businesses are facing against large competitors and against the backdrop of new technology such as crypto and blockchain-based currency. The plan addresses some of these issues by cutting the red tape.
The government has promised to cut the administrative and regulatory burdens by 25 percent. This idea is accompanied by a reform of the tax and customs systems with the same goal in mind.
It introduces a new service called Business Growth Service, designed as a one-stop shop for export support, business advice, and access to resources. The initiatives include:
- Providing management and leadership training for new business owners.
- Digital adoption pilots, which should help new business owners to accept new technologies and integrate them into their systems.
- Enterprise awards focused on young business owners as a way to promote entrepreneurship among young people.
- Annual investments of £1.2 billion in workflow skills. That way, the process will create a pipeline of new employees in a variety of industries.
Government and business reactions
Prime Minister Keir Starmer did not mince words in describing the reform:
“Too many hardworking people are being forced to spend precious hours chasing payments instead of doing what they do best – growing their businesses.”
Small Business Minister Gareth Thomas emphasises the government’s commitment:
“I want the UK to be the best place in the world to start a business, grow, and succeed. Too many small firms go under each year because they are not paid on time – that is completely unacceptable. The Plan for Change is the government listening to businesses, working with them, and delivering real change.”
Tina McKenzie of the Federation of Small Businesses praised the package and called it “the most pro-SME agenda in a generation.”
To sum up
The UK government introduced a new set of policies to support small businesses. It tackles the issues of late payments that business owners have complained about for years. The plan also provides a variety of support mechanisms for small businesses, including direct assistance and loans.
Both the government and the association of small businesses have been enthusiastic about the plan and the broader efforts to support business owners. There are also measures put in place to support young entrepreneurs in particular.