The government’s plan to extend its ‘Time to Pay’ initiative indefinitely was met with a range of both negative and positive opinions.
One the one hand small business owners were pleased that the government were implementing a practical scheme to help their companies recover from the downturn, yet on the other hand accountants warns that businesses should not rely on the initiative in the long term and feared that the scheme would further encourage the late payment culture that has dominated enterprise since the recession began.
A recent poll claimed that small businesses in the UK are owed on average over £40,000 in bad debt. We all know that one of the most important things to a company during tough economic times is maintaining a healthy cash flow, therefore, the consequences of having that much bad debt can be catastrophic.
The survey, which included over three hundred small businesses, found that the amount small businesses are owed has increased month on month since the beginning of 2010.
John Yates, economic advisor to the forum of small business, comments: ‘The late payment culture in the country is deeply concerning. While the government has taken steps in the past to improve the situation by implementing policies which encourage businesses to pay on time, when you take into account the devastating impact late payment has on the small business sector, undoubtedly more needs to be done.’