Government agencies introduced The Prompt Payment Code a year ago, despite of which they fail to pay small businesses on time, placing some entrepreneurs at risk. Actually, The Prompt Payment Code was brought into effect in order to guard small businesses from government who pays invoices late. Even as at the beginning of the recession it was promised by central government that they will pay small business owners within ten days they are not able to act as per their promise. FSB found that they make delay in one payment out of three.
In support of the existing scenario John Wright, national chairman of the FSB says, “It is shocking that after the government put the Prompt Payment Code in place, so many businesses are still being paid late.” Additional to this a recent Annual report-‘Voice of Small Business’ also shows delay in one out of three payments from the public sector, reprimanding small business owners as if they have less power to enforce prompt payment.
The poll conducted by the Federation of Small Businesses and ICM authenticated that small business have really faced a challenging year, by means of 52 per cent of the 10,000 small firms surveyed reporting that profits had collapsed in 2009.
In reality, the delay in payments can have an upsetting impact on small businesses as it relies on payment with the agreed timescale to make sure it has a stable cash flow unlike large firms that have adequate reserves to deal with late payments.
