Scotland's SMEs need our support more than ever - comment
Small businesses are Scotland’s lifeblood.
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.
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.
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
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