Small firms concerned by Government’s payment vow

Nov 10 2008 by Karen Dent, The Journal

SMALL firms are concerned the Government will be unable to meet its pledge to pay its debts within 10 days.

As part of its package of measures to help entrepreneurs through the credit crunch, the Government promised to pay trade invoices within 10 days rather than 30 days. But it will have its work cut out to meet the target unless it tackles the speed at which it pays its bills. Just over one-third of small firms consider the Government and public sector to be a prompt payer, while the rest thought it was a slow payer or average at paying within its own previous 30-day deadline.

The research comes from credit risk management firm Graydon UK, which warned that even with the best will, the Government may face problems delivering on its 10-day pledge.

Managing director Martin Williams said: “As the Government has already discovered during the last few weeks of this credit crisis, taking action and expecting immediate results is misplaced. When Gordon Brown announced the Government’s multi-billion liquidity package for the banks, he hoped to see the banks commence lending to consumers and small businesses once again.

“Weeks later, clients are still complaining about the difficulties in obtaining finance.” He also expressed concerns that Government departments may also be receiving late payments, which may put them under cashflow pressure themselves.

“If the money isn’t there day to day, paying bills in 10 days instead of 30 becomes a tough proposition,” said Mr Williams.