EOW Reflections: Enterprise Research Centre report

“We need to tackle the late payment problem for small firms by collecting more robust data to expose poor practices and imposing penalties accordingly.”

That line from a report well worth reading this week from the Enterprise Research Centre gladdened my heart.

There’s a host of reasonably achievable recommendations in the Manifesto from highly qualified, experienced and respected researchers from universities and business schools all around the UK.

And here’s what I’ve been reflecting on for the past 2.5 years in this job: without research I don’t have evidence and without evidence I don’t have, and won’t win, the arguments.

I want good research into what’s called, in industry shorthand, ‘late’ payments to give me the evidence I need to ask officials and Ministers for the various steps we might be able to take to solve what is a decades old problem. How do we get small businesses paid quicker so they can be more productive, innovative and grow?

You’ll know I bang on about poor payment practices, extended payment terms, unfair contracts relating to payments. All of these are issues small businesses feel are visited on them by their bigger customers simply because the bigger firm has more power. We talk about the ‘culture of late payments’ as if we know for sure there is such a thing. It could be that there is or that it’s in pockets, or in individual firms, or more prevalent in certain sectors. Is it a culture across the board?

Not only does evidence from research give us fuel with which to build persuasive arguments but it allows us to identify the problems and the extent of those problems, which in turn allows us to prioritise. If anyone has a bit of spare capacity to do some brilliant research and some money to fund it, here’s what I’d like to bottom out: Is there a culture of late payments in the UK. If so, are firms deliberately holding back/delaying payments beyond the agreed due date? If so, why? Financial expediency, antiquated processes or ‘other’? To what extend are extended payment terms an issue (60days/90 days/120 days etc)? Is the practice of offering extended terms ‘cultural’ or again ‘other’? How do extended payments or overdue invoices affect the suppliers and their businesses and families, and employees and mental health? There’s more. The list goes on. But you get the picture.

I would like to know exactly what it is we’re trying to fix rather than simply using blanket terms like ‘late’ payments. Only then can we really work out what the various solutions might be. If for example, we identify the biggest payment problem as being caused by extended terms (which anecdotally we hear is the case) then perhaps there a route to improving the payment practices through legislation relating to Fair Contracts. The better the data we have to work with the better informed we can be and the better the ideas we can come up with for workable solutions. Without that research we come up with legislation that unenforceable, doesn’t address the real problems and simply leaves us dealing with unintended consequences.

The ERC has been working with Government departments and other bodies for 10 years now to give us the research we need to get better outcomes for small businesses. Happy birthday and keep on doing what you’re doing, Mark, Stephen, Vicki and everyone else involved. But can you please prioritise my need for evidence.

Not sure who’s going to pay for it though!