40 The gift industry spends much of the year planning for moments that haven’t happened yet. While customers are enjoying summer, retailers are thinking about Christmas, and while Christmas stock is still on the shelves, suppliers are already developing ranges for Easter. The cycle continues. That makes cashflow particularly important. Many gift businesses operate on relatively narrow margins, so recruiting staff ahead of a busy period comes down to knowing when money will arrive and planning around it. That means when payments are delayed, that certainty disappears. Now, thanks to years of FSB campaigning, the new Small Business Protections Bill will give the UK what is set to become the toughest late payments regime in the G7 and the biggest overhaul of the rules in more than 25 years. For small firms, this means less time wasted chasing invoices, more confidence to invest and hire, and fewer business owners lying awake at night worrying whether they can cover wages, bills or stock orders. At a time when the UK is searching for growth, freeing small firms to focus on running and growing their businesses instead of acting as unpaid debt collectors matters enormously. One of the central reforms in the package is a new corporate governance requirement around payment practices. Boards and audit committees at large companies will now have to publicly explain poor payment performance and set out what they are doing to improve it, bringing far greater accountability to senior leadership teams, including CEOs and CFOs. That is how you keep the supply chain moving. Large firms will face a strict 60-day cap on payment terms when dealing with smaller suppliers, shutting down the worst examples of 90- or even 120-day waits to be paid. Mandatory interest on late payments will also be introduced automatically, removing the burden from small firms to chase extra charges themselves. FSB also pushed for tougher powers for the Small Business Commissioner, including the ability to investigate poor payment practices, compel information from large firms, adjudicate disputes and issue penalties against persistent offenders. FSB’s focus now is making sure the Bill passes in full and is not diluted under pressure from large corporates and their lobbying groups. There are already calls for a more “balanced” approach, but small firms have heard that before. Loopholes such as “unless otherwise agreed” helped weaken previous legislation and allowed excessive payment terms to become embedded across supply chains. MPs and peers should be wary of repeating the same mistake. These reforms will not solve every challenge facing small businesses overnight. But they should mean fewer hours spent chasing invoices, fewer sleepless nights worrying about cashflow, and more confidence to actually plan ahead. New measures set out in the Small Business Protections Bill could transform cashflow for gift businesses, according to Tina McKenzie, Policy Chair at the Federation of Small Businesses, who explains why tougher rules on late payments are long overdue LATE PAYMENT REFORM ABOUT FSB As the UK’s business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed. FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.
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