LF code no track
Written by Philip King, Chief Executive of the Chartered Institute of Credit Management (CICM).

We are now more than three months on from the crazy events of the early summer, and Theresa May and the Conservative Party have still managed to cling on to power. The summer recess, of course, put paid to meaningful progress in the short term as all sides retired to take stock, but now it’s, ‘business as usual’ and politicians can get on with the business of governing, and fulfilling their manifesto promises.

What will this mean, therefore, for small businesses, especially in relation to issues such as credit, late payment and the Prompt Payment Code?

The Conservatives campaigned on a ticket of ‘a strong economy that works for everyone’ which means an economy built on sound public finances, lower taxes, better regulation, and free trade deals with markets around the world. It particularly wants to increase international trade, and is committed to taking a more active role in helping small businesses to identify and exploit new markets abroad. It puts export finance at the heart of its proposal; in short, it wants to ensure that no viable UK export fails for lack of finance.

The ambition is a laudable one; economies thrive on the strength of their import/export activities, and lack of finance should never be a barrier to winning new deals.

In terms of domestic growth, the Conservatives claim to be the party of enterprise and of the entrepreneur, and claim also to understand the needs of small businesses. Specific actions, however, are a little thin on the ground, with the exception of a commitment to ‘ensure that 33 percent of central government purchasing will come from SMEs by the end of the Parliament’. It will also ‘…explore how government can do even more to support innovation by small and start-up firms.’

What is rather surprising, and perhaps disappointing, is the lack of any obvious detail around how they hope to achieve these ambitions. There is no mention, for example, of a whole raft of funding options that are already available and supported; the Fintech and alternative finance sector is conspicuous by its absence, despite the various initiatives with which the CICM has been closely involved in recent years.

From the CICM’s perspective, however, the best is saved ‘til last: the government says that it will use its buying power to ‘ensure that big contractors comply with the Prompt Payment Code both on government contracts and in their work with others.’ It also issues a threat, that if big businesses do not comply, ‘they will lose the right to bid for government contracts.’

This could be a step change for government. If the government is serious about supporting small businesses, and cracking down on late payment, then it should reward those who demonstrate best practice, who adhere to the Code, and who evidence the value they place in the supply chain.

The Conservatives clearly see the Prompt Payment Code, and by definition the role of professional credit managers and members of the CICM, as being critical to driving a better payment culture. Our position has always been that the experts are there, and the tools in place, to improve payment practices. They simply need greater recognition and support.

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