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Bibby’s Financial Services report presents recent figures from the Asset Based Finance Association showing British SMEs are owed £67.4 billion.

Late payment by large companies is often the reason for seeking ‘risky’ loans and the EU Directive, which aimed to change the late payment culture in the business world and force companies to cap maximum contractual periods, appears not to be working well in Britain. Bibby’s finds that, on average, businesses waited 40 days for payment in Q1 2016 with 30% of SMEs waiting more than 51 days for customer payment.

If government won’t act, industry could

The Dutch engineering industry did not wait for legislation. They set up an industry-regulated payment routine years ago. A Solihull engineer who deals with the Dutch engineering industry finds their system works well. 30% of the full amount due is paid immediately, and 30% is paid on completion of the job. The final amount is deemed to be the profit and follows later within a stipulated time frame. This helps to avoid the cash-flow problems afflicting those in this country who often have to wait for three months – and more – before any payment is made.

Bibby’s comment: “For many businesses, late payment can mean stalled ambitions, lower growth, and time wasted over chasing clients for payment. At worse, it can break a business”. What happens then is highlighted on the Business Desk.

After three years, allegations reported on the West Midlands Producers website, the subject of a government inquiry, have been investigated by BuzzFeed News and BBC Newsnight.

lawrence-tomlinson

Yorkshire businessman Lawrence Tomlinson told the Sunday Times in 2013,  “There is a wealth of evidence which suggests that RBS has forced healthy, vibrant businesses into financial trouble and… seized their assets to benefit its own vast property empire.” He had presented evidence to the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) in a dossier forwarded by then Business Secretary Vince Cable, and has awaited results of the FCA review ever since. RBS’ Global Restructuring Group (GRG) lending division is said to have the power to scrap loan deals, impose inflated interest rates and charge hefty penalties.

Though there have been positive administration experiences in the West Midlands (Dunnetts and BI Composites), too often other banks and organisations connected with such administrations charge large fees for their services, leaving SME creditors with little or nothing, though in natural justice they should have the first claim for supplying the firms in question with goods or services.

 

 

 

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