Scotland's SMEs need our support more than ever - comment

Small businesses are Scotland’s lifeblood.

Monday, 28th September 2020, 7:30 am
Christensen flags a slowdown in small firms getting paid in Scotland. Picture: Jon Savage.
Christensen flags a slowdown in small firms getting paid in Scotland. Picture: Jon Savage.

It has been the shopkeepers, the farmers and the tradespeople who have kept Scots fed and safe at home through this pandemic. Now, as the lockdown has eased, those hard-working businesses and the 42 per cent of Scottish people employed by them are under threat, making it time for all of us to sound the alarm.

Our data shows a slowdown in how fast small firms are getting paid in Scotland. According to Previse’s analysis of more than £150 million in corporate invoices over two months during the pandemic, small and medium-sized enterprise invoices have been paid about 20 per cent slower than previously.

Sign up to our daily newsletter

The i newsletter cut through the noise

Think about every step in a day in the life of a small business. All of that and more depends on other businesses paying them, promptly. The solution is simple. It’s critical that SMEs and large corporates work in harmony to ensure cashflow is sped up and the recovery from the economic impact of Covid-19 is accelerated.

Read More

Read More
Professor Graeme Roy: The climb back for Scotland's economy has begun

But Nicola Sturgeon and the government in Edinburgh need to act fast and drastically cut the acceptable terms for invoices to be paid on. Previse is calling on government to ensure that all SMEs have the option to be paid instantly when invoices are raised. The technology exists to do this – the pressure to use it isn’t yet strong enough from the business community or from government.

The implications if we don’t make this extraordinary commitment are stark. With Christmas approaching, if small firms continue to struggle to operate, the cashflow and supply-chain issues they face will pass through the economy like a shockwave, damaging even the biggest brands.

We are seeing this already, with our analysis showing an almost 40 per cent drop in the value of invoices during the pandemic. Every year in the UK, 50,000 firms are driven to bankruptcy while waiting for late payments. That represents a huge strain on individuals, families and the economy at the best of times, let alone under current pressures.

This pandemic has shown bold solutions are possible, such as furloughing, to keep the economy moving. That innovation is going to have to continue, and we need a movement demanding that small firms can get paid instantly, whenever they issue an invoice. We’ve started to fight off the contagion of Covid-19 but it’s time for us battle the economic contagion before it’s too late.

Paul Christensen is chief executive of fintech Previse

A message from the Editor:

Thank you for reading this story on our website. While I have your attention, I also have an important request to make of you.

The dramatic events of 2020 are having a major impact on many of our advertisers - and consequently the revenue we receive. We are now more reliant than ever on you taking out a digital subscription to support our journalism.

Subscribe to scotsman.com and enjoy unlimited access to Scottish news and information online and on our app. Visit https://www.u2swisshome.com/subscriptions now to sign up. By supporting us, we are able to support you in providing trusted, fact-checked content for this website.

Joy Yates

Editorial Director

 0 comments

Want to join the conversation? Please or to comment on this article.