Helping small businesses fight late payments

At Starling. we're passionate about supporting small businesses manage their finances.

When our Head of Public Affairs Sarah Williams-Gardener met the Small Business Commissioner, we wanted to share what he’s doing to help small businesses. We asked journalist Josephine Moulds to interview him and find out more....

Paul Uppal has big ambitions as the UK’s first Small Business Commissioner. A former small business owner, he knows what it’s like for the companies he now works with. “It can be very lonely running your own business,” he says. Paul had “huge support” from his family when he ran his small construction company, and he is keen to replicate that for businesses up and down the country.

“I can’t promise we can offer a full network of an extended Asian family,” he jokes, “but we do try and help wherever we can.”

The government created the role of the Small Business Commissioner (SBC) in December 2017 to make sure payment practices are fair for Britain’s 5.7 million small businesses. It has initially focused on the thorny issue of late payments, with a free dispute-resolution service. Paul’s team will consider complaints from any small business having payment problems with a large business. If they can help, they will gather evidence and make recommendations on how to resolve the dispute.

Paul says: “We’ve found whenever we do get involved, we have quite a good result. We’ve managed to raise just under £400,000 for small businesses in payments they probably wouldn’t otherwise have got. For each of those small businesses, that was quite a significant sum.”

Getting the basics right His advice to business owners having payment problems is to “do all the basic stuff” first. “Make sure the invoice is done out correctly. Try and find a human point of contact, if you can, within the large business. If that fails, then please give us a go.”

Small businesses can either email or call the Small Business Commissioner. Paul says: “Even if we can’t directly help with your concern, we will signpost you to someone who can. Almost everybody in my team has small business experience. So we are acutely aware of the pressures small businesses are under.” He says some cases of late payment are down to small companies ‘falling through the cracks’ in complex payment management systems.

Paul agrees there are also plenty of large businesses that abuse their position and withhold or delay payments to make their own results look better. “There is an imbalance in power. We’ve seen that when we go into bat on behalf of small businesses.” That imbalance means many small businesses are unwilling to speak out against potentially lucrative customers. Paul says: “Perhaps a bigger part of the role is to try and change the culture around this. The more we put the spotlight on this as an issue, we can perhaps give small businesses the confidence to come forward.” He says his office can take complaints anonymously. “We understand that reticence. There’s nothing we will do that will materially damage a small business.”

Late payments stifling growth Small businesses being paid late is a huge problem for the country as a whole. The SBC says that one fifth of small businesses have run into cash flow problems due to late payments. If small businesses were paid on time, it could boost the economy by an estimated £2.5 billion annually, according to the Federation of Small Businesses. Paul says that figure could be even higher, as it doesn’t account for the fact that business owners do not invest if they cannot be sure when they will be paid. “I’m convinced from my nine months in this role, the biggest impediment on business growth is unpredictability of cash flow. The sooner small businesses know they are going to get paid when they expect to get paid, they can actually make plans in terms of increasing turnover and taking on staff.” Late payments also have an impact on business owners’ mental health, which is rarely spoken about. As a small business owner, Paul says he was very persistent in chasing payments to bring them in on time. He admits: “You couldn’t always do that and then you were dependent on overdrafts, which caused quite a lot of stress.”

He says: “One of the messages we are trying to get out to procurement offices is, ‘Don’t just look at that invoice as a piece of paper. There’s a human being at the end of that process, there’s a family, there’s a business, there are human relationships.’”

When procurement offices understand that, they understand the full impact of late payments. Paul says: “It’s not just the economic issue, it’s the impact it has on mental health as well.” The role of Small Business Commissioner has come in for some criticism. Paul has no power to punish repeat offenders, or enforce actions to resolve payment disputes. Paul says: “We can name or shame. The process to shame [a company] has to be followed through from a complaint.”

He agrees it could be helpful to have the power to levy fines. The government’s Groceries Code Adjudicator, who ensures supermarkets and other retailers treat their suppliers fairly, has that power. Paul says: “She doesn’t always exercise [it] but I think having that power certainly focuses people’s minds. It could be a string to the bow.”

As the first Small Business Commissioner, he says there is an opportunity to shape the role. He hints that his remit could be extended to include the construction industry which, he says, is “probably the worst sector for late payment”. Having worked in the industry for more than 20 years, he would know. Find out more about the Small Business Commissioner through the official website .