Small business loses bad debt advice

Online credit checker, e-bcm, is calling on the UK government to reverse its decision to scrap the Better Payment Practice Group.

Dissolution of the BPP Group will mean UK small businesses will have nowhere to turn for advice on bad debt and late payments.

The Department for Business, Enterprise and Regulatory Reform (formerly the DTI) recently announced that it is cutting funding through the Small Business Service for the Better Payment Practice Group, which provided advice and guidance to small firms on avoiding late payments and bad debts.

“It is small businesses that suffer most as a result of bad and late payment and the withdrawal of government support sends out completely the wrong message, especially at a time when credit is getting tighter and more firms are likely to be put out of business due to cashflow problems," says Dennis Scott, commercial director of e-bcm. "Effectively, the government is cutting small businesses adrift. We think that it will end up costing the taxpayer money, in lower company profits and lost tax revenues.”

Last year, research by BACS Payment Schemes showed that at any one time, UK small businesses are owed almost £16bn and that 59 percent of SMEs have experienced problems with delayed payments at some time.

A separate report from Leeds University Business School stated that the UK small businesses write off an average of £14,000 in bad debt each year.

“We know from our own work with customers that the problem is getting bigger not smaller and disbanding the Better Payment Practice Group is a move in entirely the wrong direction," says Scott. "The government should be backing small businesses not abandoning them in this way.”

Further reading:

VARs should factor for late payments