Big firms must be properly penalised for late payment

Purbeck Personal Guarantee Insurance has welcomed the government’s review into the late payment practices of big firms[i] but is calling for tougher measures to stop the stranglehold larger businesses have over their smaller suppliers, once and for all. Recent research by the personal guarantee insurance provider to small business owners[ii] found that rather than planning for growth, 52% of small firms are just focused on ‘keeping on an even keel’ in the year ahead.

Underlining the importance of the levelling-up agenda, Purbeck found that almost 3 in 4 small firms in the East Midlands are solely focused on keeping business on an even keel – this is more than any other region.  Just 28% of small firms are planning for growth in the East Midlands compared to 43% in the South East and 40% in London and East Anglia.

Todd Davison, MD of Purbeck Personal Guarantee Insurance said: “After a resurgence in Covid infections and Brexit, late payment was a top concern for small businesses last year[iii].  We’re now in very different waters and it’s vital big businesses are properly penalised for the harm they cause when they pay their small suppliers late. Cashflow problems not only stymie growth, it forces some small firms into taking on finance just to keep their heads above water.  This isn’t right or fair.  We are all in the same boat right now and big firms need to find more ethical ways of managing their own cashflows rather than taking the easy route of delaying payment to the time it suits them, rather than the time stipulated by their supplier.”

[i] https://www.gov.uk/government/news/business-secretary-launches-review-to-prevent-small-firms-from-being-ripped-off-by-larger-companies

[ii] Survey undertaken on Maru/Hub October 2022 by Purbeck Personal Guarantee Insurance of 1000 business owners or managers in small businesses.

[iii] Survey conducted May 2021 via Cision of 1000 SME Owners and Directors