Interesting little piece posted in FinancialDirector, pointing out that the UK Chancellor of the Exchequer (think Treasury Secretary), included commentary about late payments to SMEs in the Spring Statement. This is one of two semi-annual economic/budget discussions provided to Parliament.
“This week’s Spring Statement was no ordinary statement. It took place in the middle of 72 hours of voting on the major story of the day, Brexit, and was therefore deeply overshadowed….What would have been a fairly important event in the UK economic calendar was relegated to a side show as the main drama unfolded centre stage….And yet for UK small- and medium-sized businesses, there was a highly encouraging take-away from the Despatch Box: the Chancellor’s commitment and growing resolve to address the critical issue of late payments for SMEs.”
Not deeply familiar with how something like this type of potential government intervention actually might occur in the UK, other than some legislation. As far as we know, this ministerial position has no regulatory responsibilities, but prima facie would have a great deal of influence across various aisles. As to the culture of late payments to SMEs in the UK (which we have previously highlighted in these pages), typically one would expect that this is purely a matter for the free market to hash out. This is the age of digitization, and certainly SMEs should start there. There is a solution for just about any business process issue, and financial ops is high on the list of fintech investment.
‘We are currently waiting on more information and details from Greg Clark, the Business Secretary, to be published in the days or weeks ahead….In the meantime, to tackle “the scourge of late payments”, Mr Hammond announced that, “as a first step, we will require company Audit Committees to review payment practices, and report on them in their Annual Accounts.”…Translate: the Government is going to make late payments a board room, corporate governance and potentially even CSR issue rather than something that is kept firmly under wraps by the finance division….This type of increased transparency and accountability by those at the top of the supply chain is long overdue.’
Yikes, those big company bullies must be a tad nervous…judgement day indeed.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group