Business leaders call for steps to ease cashflow crisis

Nov 21 2008 by Karen Dent, The Journal

BUSINESS leaders put pressure on the Prime Minister and the Chancellor yesterday to demand they take steps to ease the cashflow crisis engulfing thousands of small firms during the economic slowdown.

A dozen representatives from organisations including the Federation of Small Businesses, the CBI, the IoD, EEF and Chambers of Commerce met Gordon Brown and Alistair Darling in London.

North East businessman and FSB national chairman John Wright was at the meeting to put forward a number a suggestions to ease the pressure on the UK’s 4.7 million small businesses.

He said: “We want a £1bn micro business survival fund to be paid through post offices or the regional development agencies. The money could come from the European Investment Bank or an expansion of the Small Business Loans Guarantee Scheme.” The FSB has set up a “Bank Watch” scheme to monitor how members are treated by their banks. The Government has already told banks they must return small business lending to 2007 levels.

Mr Wright said the Prime Minister and the Chancellor reacted positively to suggestions to free up cash for struggling firms. “They were concerned about the banks and they are going to have further meetings with them to try and get them to toe the line and help viable businesses and not put excess pressure on them,” he said. “Banks have been a bit inconsistent in the way they have dealt with small businesses.”

A number of local authorities in the South are now matching the Government’s promise to pay their bills to small enterprises within 10 days.

Mr Wright said: “We are asking all the councils in the North East to pay their bills in 10 days. That improves dramatically the cashflow.”

He also called for the enforcement of an under-used part of the 1985 Companies Act which requires all businesses to submit their payment policy to Companies House. “The FSB wants it enforced and those that renege to be publicly named and shamed,” said Mr Wright. He added: “We can’t afford to lose one business that is viable if it is in difficulties because of cashflow.”