Small Business Package Is A Step In Right Direction

The Government says that the proposals are designed to preserve small firms’ cash flow by improving access to finance. The changes include extending its pledge to lead the way on tackling payment by paying its own suppliers within ten days; is offering free ‘Health Checks’ for businesses in England through the Business Link support service, helping to identify problems early and to help them survive in the current financial climate, prioritising training for small firms in England under the Train to Gain initiative, ensuring employees have the skills and business knowledge they need and provide financial information, produced by the Institute of Credit Management and helping UK businesses to maintain cash flow, secure finance and limit problems caused by late or non-payment. 

“We are on the side of small and medium sized businesses and understand that they are facing tough times. The Government has taken steps to ensure that banks can start lending to them again,” said Peter Mandelson, the new secretary of state for business, Enterprise and Regulatory Reform (BERR). “But we’re determined to do more. Businesses tell us they need access to cash flow. That’s why central Government has committed to paying businesses within ten days – and we’re urgently speaking to the wider public sector to extend this commitment. We want everyone in the supply chain to pay their bills more quickly.”

However, the FPB is calling on banks to commit to preserving and improving credit lines for small firms. “Following a meeting of the Small Business Forum last week, where the FPB called for real measures to assist small businesses in the economic downturn, the Government appears to have put together a useful raft of initial measures,” said Phil Orford, chief executive of the FPB. “In particular, the FPB welcomes efforts to ensure that the public sector organisations pay suppliers within ten days, and that credit management skills and other training is improved to help businesses negotiate their way through the downturn.”

He added, “While we welcome these measures, the FPB believes that the small business lobby groups, politicians and the media must continue to pressure banks to live up to their responsibilities and restore lending to 2007 levels, as has been promised.”

In the FPB’s latest quarterly survey of members, Referendum, almost one in three respondents (31%) said they consider late payment to be a ‘significant’ barrier to the growth of their businesses. Access to finance was considered to be a barrier by 13% of respondents. The Government hopes that the free business health checks outlined in the package will to provide personalised support and confidential advice for all businesses on maximising cash flow, marketing and business planning. Business Link will also provide a follow-on and monitoring service, and free financial guidance will be available from the Institute of Credit Management on effective invoice chasing, debt management and credit insurance.

In the short-term, increased access to credit and the ability to better manage their cash-flow will be the keys to small business survival. The UK economy will also benefit in the medium-term from the regulatory and tax system reforms that will help small businesses take advantage of new opportunities when the worst of the economic crisis is past.