Caroline Theobald, CBE, Director of the North East Initiative on Business Ethics (NIBE), explains why it's time to get serious about fair pay
If your business has ever been a victim of late payment, you’ll know just how debilitating it can be. It can cripple your cashflow and have negative consequences for you and your staff in terms of morale and potentially delayed salary payments. And not only that, you feel embarrassed and very, very alone.
I know, because I’ve been there and I’ll never forget it – it very nearly took Bridge Club Ltd under. When we launched NIBE in 2013, late payment was the issue of most concern to our small-business audience and it continues to be an enormous worry.
Our intervention and challenge resulted in an improvement for a period in the earlier payment of bills and there continues to be litigation over matters connected to the unwillingness to pay. Late payment causes 50,000 small business failures annually and while various Governments have tried to legislate/regulate against it, it’s simply not getting better.
According to colleagues at the Federation of Small Businesses (FSB) in the region, the issue is actually getting worse. North East England Development Manager Simon Hanson tells me he gets two complaints a week from member companies.
Indeed, current research from the FSB shows a third of payments to small businesses are late. Some 37% of small firms have run into cash flow difficulties, 30% have been forced to use an overdraft and 20% cite a slowdown in profit growth. Shockingly, nine out of ten public sector suppliers say they have been paid late.
No right-thinking business person thinks that’s acceptable. Late payment /unfair payment terms are wrong but because of the embarrassment factor and the fear of losing big clients or being penalised within a supply chain, a lot of the pain is hidden.
Poor payment practices hurt the UK’s small business community and hold back the economy.
NIBE, the FSB and Sage (signatories to the Government’s Prompt Payment Code) want to do something about that so our next North East Ethical Business Network on September 10th will bring people together to share their stories, get support and receive practical advice on how to avoid unfair payment terms.
At this event, held at Natwest Business Bank, we will focus on fair pay and the importance of paying your contractors on time’. We have an excellent line-up, with talks from Seamus Smith, EVP of Global Payments and Banking at Sage, and Simon Hanson, from the FSB.
There will also be an opportunity to network with the other participants and to discover how they are striving to be more ethical in their approach to business.
But we want to do more than that. We want your help to raise the bar and start shouting about the heroes and devils. Companies, large and small, that pay on time need recognition for that.
It’s heartening to see the Good Work Business Pledge being developed by North of Tyne Combined Authority to promote better business conditions and behaviour. We know that we have a supporter in Jamie Driscoll, new mayor of North of Tyne, to take action against late payment.
But if we’re going to eradicate the problem in the North East region, encourage business growth and un-glue our economy, we need to do more and take responsibility ourselves as business owners. We need to put systems in place to protect ourselves, and be courageous when customers don’t pay.
Join us on 10th September and help us raise our regional voice against late payers.
Visit www.nibe.org.uk for more details. Tickets can be purchased from www.eventbrite.co.uk
