Ensuring that you have an adequate level of business insurance for your SME is essential if you are to have confidence in its long-term viability. However, finding the right level of cover is just one of the many challenges facing SMEs in 2019. In fact, one of the largest challenges is also one of the most elementary: getting paid in full and on time.
Unfortunately, the biggest offenders in this regard are frequently larger businesses who use their size, influence and legal power to effectively bully smaller firms into accepting no, late or reduced payment for their services.
Therefore, it is encouraging to hear of proposals to fine those larger businesses that fail to pay smaller firms on time. The proposals were announced by Small Business Minister Kelly Tolhurst this week as part of a broader raft of measures designed to protect and stimulate the activities of SMEs in the UK.
If the proposals come into law, company boards stand to be held liable for cynical supply chain payment practices for the first time, while Audit Committees will be obliged to report payment practices as part of company annual reports.
The practice of larger and more powerful companies bullying smaller enterprises in relation to invoices has come into the spotlight recently as, across the Atlantic, it is an entrenched part of the Trump Organization’s modus operandi; there have been many documented cases of small businesses being forced into accepting late and reduced payments through fear of becoming embroiled in expensive and lengthy litigation with the Trump Organization.
By using increased powers to impose fines and binding payment orders on larger businesses as part of the Prompt Payment Code, the Small Business Commissioner may be able to go some way to redressing the power imbalance that too often results in SMEs suffering from unfair payment practices.
In 2015 a study by e-invoicing firm Tungsten found that 12 per cent of the UK’s 5.2 million SMEs faced at least 90 days waiting to be paid by customers.
This can be difficult, particularly as firms already face significant overheads – for example, high street rents, staff costs, data protection and business insurance for SMEs.
Many SMEs reported that they were struggling to survive, often being forced to pay interests on overdrafts and loans as a result of being forced to wait for payment.
Tredstone helps find business insurance for SMEs. We search the market for the best cover to suit your needs so that you can have confidence that no risk is left uncovered.
No matter what you do, if you are an SME, we can help you find the most appropriate business insurance for your ongoing needs.