SMEs: Get help with late payments
Cash flow is key to a small business’ success and keeping track of being paid on time can be an administrative burden, and worst still, having to chase customers or clients for late payment is time consuming and can put your business operations at risk. Are you aware that there is help out there?
The Office of the Small Business Commissioner (OSBC)
The OSBC is an independent public organisation set up by Government in 2016 to help businesses tackle late payments head on and bring to light any unfavourable payment practices you may have experienced with payers.
The OSBC looks after businesses across the UK - England, Wales, Scotland and Northern Ireland.
Why is chasing late payments important?
There is a late payment culture that exists in the UK between businesses which translates to:
* A third of payments to small businesses are late
* The average value of each payment is £6,142
* 20% of small businesses have run in to cash flow problems due to late payments
*If small businesses were paid on time, this could boost the economy by an estimated £2.5 billion annually
The OSBC is an independent office aimed at empowering small businesses in resolving disputes around unfair payment practices and provides advice, including on how to take action if a payment is overdue.
As part of the package of measures from the OSBC to tackle late payments to SMEs, regulations came into force in April 2017 requiring large businesses to publicly report the average time they take to pay their suppliers.
This will allow suppliers, including small businesses, to make informed decisions about who they do business with.
You can check when large businesses pay their suppliers on the government website here.
Case studies of who the OSBC help
Emma Boyns Photography, Chichester
“I got in touch with the service after having no success chasing an overdue invoice on my own. It was my first time having to use this avenue and Jodie was very helpful in explaining the process. Correspondence was prompt and clear, and Jodie sent an informal email to my client on my behalf as a first step, two days after which the invoice was paid”.
Award-winning freelance photographer, Emma Boyns, was commissioned to shoot images of food for promotional content.
A quote was provided to the client with a total estimated cost of £740.
Upon completion of the photoshoot, 21 images were sent to the client along with a copy of Emma’s terms and conditions, license to use and an invoice for £718.60, which stipulated 30 day payment terms.
The terms and conditions also stated that payment for the commissioned work should be paid within 30 days, and if the invoice was not paid in full, the photographer reserved the right to charge interest in accordance to the Late Payment of Commercial Debt (Interest) Act 1998.
Emma chased the client 3 days after payment was due, and also issued a revised invoice that included late payment interest and compensation 25 days later. The revised invoice amount totalled £762.45.
In February 2021, Emma contacted the Office of the Small Business Commissioner with her complaint. A Caseworker from the team helped Emma and payment was made within the following 3 days.
JF Kehoe Installations Ltd, Stafford
JF Kehoe Installations Ltd said: “We have received payment for all outstanding invoices and thank the Small Business Commissioner’s office for their assistance. They have been most helpful and we would have no hesitation in using their service again, if the need arises.”
JF Kehoe Installations Ltd are a small business contracted by various companies in the hospitality sector.
The SBC received a complaint from JF Kehoe Installations Ltd after they chased a large business over a period of months regarding outstanding invoices for services provided. The payment terms were on a monthly basis, and the complainant submitted invoices on the 1st of the month, for payment to be made within 21 days.
The complaint was received during COVID-19, when the hospitality sector had been shut down, although the invoices were due to be paid before the shutdown commenced.
The Office of the Small Business Commissioner invited the respondent business to discuss reasons for non-payment. Due to the challenging commercial conditions faced by the hospitality sector, the Small Business Commissioner encouraged both parties to work collaboratively to resolve the issue and help maintain cashflow for both businesses.
The Office of the Small Business Commissioner supported the mutually agreed resolution, with payment of £603.42 made as a full settlement for the outstanding invoices.
