Shocking amounts of money owed to smaller businesses in Sefton
Businesses in Sefton are owed a shocking estimated £120 million in late payments from bigger companies.
Figures released by BACS Payment Schemes Ltd have laid bare the extent of late payments to small and medium-sized businesses, which now stands at £26.3 billion across the UK. For the first time, the sheer scale of the unpaid bill for Sefton has been laid bare by Bill Esterson MP
Sefton Central MP, Bill Esterson, who is Labour’s Shadow Business Minister, said:
“These late payments are invoices for money our small businesses are owed by bigger companies. It’s money that is rightfully theirs for work they have done, but which goes unpaid for months on end. They are spending more than £21 million every year, just to chase money they are owed.
What’s truly sho
cking is that nearly 300 businesses right here in Sefton are going under each year because larger clients just don’t pay them what they owe.
“These are our small businesses, our local entrepreneurs; the lifeblood of our local economy, and we have to stop them being treated this way. With a £120 million hole in our local economy, it’s time for government to step in and make these big clients pay our local business men and women”.
“In total, an esti
mated 47% of all small and medium-sized businesses experience late payments by larger clients, with large private firms singled out as the worst culprits. A quarter of those affected told BACS that they routinely face delays of more than 60 days beyond agreed payment terms – meaning they struggle to pay their own suppliers, their staff, and their bills. And of course late payment to our local businesses in Formby, Maghull and Crosby, means less money available to spend in our shops and to keep our economy moving forward.
“The stakes are incredibly high: tackling the scourge of late payment means preventing 50,000 business deaths in the UK each year. Labour has pressed the Conservative Government repeatedly to do more, but it has shied away from every opportunity. Voluntary codes and gentle reminders haven’t worked: we have to act fast to save our businesses.
“That’s why my Labour colleagues and I are calling for businesses to be allowed to challenge their larger customers through mediation and what is known as binding arbitration. Arbitration and a system of fines would allow smaller suppliers to challenge their larger customers and is the system used in Australia. It avoids the problem of the larger customer being able to just stop trading with a smaller company who complains about late payment.
“My wife runs her own business and has had to wait for more than 6 months to be paid by some larger companies. This is simply not acceptable but my wife’s experience is sadly typical of what small business owners have to deal with.
For our economy to thrive we need a fair market where entrepreneurs are encouraged to start a business and to grow a business and that means action by the government where it is needed to help. Late payment of invoices is one area where government can help and I want to see a balance between the needs of large and small businesses that makes sure smaller businesses are paid promptly.”