Small firms' fury over debt blame

SMALL BUSINESSES

The Government yesterday angered small companies by claiming they were to blame for not getting paid on time.

Rejecting calls to introduce laws that would give firms the right to claim interest on overdue bills, Richard Page, the minister for small business, said: "Small companies are so delighted about winning an order they forget about getting paid."

His remarks came as the Deputy Prime Minister, Michael Heseltine, unveiled a pounds 200m package of support for small and medium business in his third Competitiveness White Paper, including help for small firms to recover debts.

Mr Page's comments were condemned by the Forum of Private Business, which speaks for 24,000 members. "It take a blind nerve to suggest small companies bring this on themselves," said Dave Harrop. "Dominant customers know full well they can get away with not paying their bills on time."

A survey by the Confederation of British Industry found late payment is a problem for almost half of small and medium-sized businesses.

Almost a quarter have to wait up to 90 days before being paid, causing cash-flow problems, difficulties repaying bank loans and the collapse of up to 5,000 businesses a year.

A Bill going through Parliament gives contractors greater protection. But Mr Page urged small firms to put their own house in order by improving credit management, to reduce the problem of late payment.

He cited recent research that found less than one-fifth of smaller firms had a credit policy, two-fifths did not agree terms in writing before a sale and 83 per cent paid their suppliers late.

The issue of late payment shot to the top of the political agenda earlier this year following remarks by Mr Heseltine that as a small businessman he had been "quite skilful at stringing along the creditors". Late payment, he said, was part of the culture of British business.

The Prime Minister, John Major, promised to look at ways of shaming late payers into settling debts on time. But the Government has stopped short of introducing a statutory right of interest, arguing that it would legitimise late payment.

Instead, companies are now obliged to state what their policy on late payment is.