Having robust cash flow management is one of the most important aspects of any successful business. Indeed, it has been widely established that taking the time to develop an effective system and implementing it from the point of company formation, is one of the best ways of ensuring your company survives the recession.
Last year, the government highlighted the importance of cash flow management in its ‘Prompt Payment Code’ – one of many initiatives structured to help small businesses and recently formed companies during the recession. However, a report out today has revealed that, despite Lord Mandleson’s pledge to pay all small businesses working for the government within a ten day time frame, the business secretary has failed to honour that commitment.
Indeed, according to the report, over 90% of all the small business owners surveyed have not been paid within the specified period and over 50% have been waiting for over six weeks or payment.
Sam Turner, owner of IT company MVNO comments; “Historically the public sector has always had a better reputation than the private sector, when it comes to paying on time. However, as the report highlights, this has changed. Cash flow is absolutely crucial to most small businesses – a fact that the government has reiterated time and time again. The fact that it is not paying its suppliers on time offers a poor example to the private sector and sets the tone for the way in which business operates as a whole in the UK.”