Image: David Goehring Image: David Goehring

84 per cent of small business owners do not think the introduction of the small business commissioner will have a positive impact on their business. Tony Smith reports…

There are certainly plenty of recurring problems small businesses are experiencing that they could do with a little help to solve. You might think then that with late payments and disputes with larger companies commonplace, the introduction of a government-backed ombudsman would be well received. However, the creation of the small business commissioner role has been welcomed with widespread apathy, with new research showing most business owners are sceptical about the type of impact it will have.

What is the small business commissioner?

That’s a good question. Following a two-year search for the right candidate, former small business owner Paul Uppal began his new role as the small business commissioner three months ago. But what exactly does he do?

Regulations introduced by the small business minister Margot James, have given the commissioner the power to handle complaints from small businesses about unfair payment practices. The small business commissioner has a website that business owners can use to access guidance on late payment issues, learn more about the action they can take if a payment is overdue and submit late payment complaints.

As well as resolving individual disputes, the commissioner also aims to increase the awareness of the problems caused by late payments to drive culture change.

What does the research say?

A recent study that looked more closely at how businesses were feeling about the introduction of the small business commissioner found that the vast majority were certainly not overly optimistic about the impact it would have. Just 16.2 per cent of business owners said they felt the appointment of the small business commissioner would strengthen their position, while 41.8 per cent said they felt the scheme would have no impact on their business. The remaining 42 per cent decided to sit on the fence and said they ‘didn’t know’ what the impact would be.

Although largely apathetic about the potential impact of Mr Uppal’s appointment, businesses did have clear views about the issues they want resolving. 26.1 per cent felt his priority should be to improve the resources and services available to support small businesses in general, while 15.2 per cent want the commissioner to focus on tackling the issue of late payments specifically. A further 15 per cent felt that helping smaller businesses in disputes with larger organisations would be the best use of Mr Uppal’s time.

The scale of the late payment problem

This is not the first attempt the government has made to try and tackle the late payment problem; however, the initiatives introduced to date, such as the Prompt Payment Code, have failed to have the impact it would have liked. This has been highlighted by the recent collapse of Carillion, with the industry giant notorious for taking over 120 days to settle suppliers’ bills. The result was that on liquidation, 30,000 businesses were left with up to £1bn in unpaid invoices.

At the latest count, a YouGov poll of 1,233 businesses found that 40 per cent of UK businesses said they had received a late payment in the last month. In response to the problems this causes, 17 per cent said they were delaying planned investments, 15 per cent were unable to pay salaries and seven per cent were making redundancies.

Clearly, the launch of an independent ombudsman who can try and level the playing the playing field for smaller businesses is a well-intentioned move, but whether it can have any significant impact is another question entirely.

Author: Tony Smith is the director of Business Expert, an online platform that allows businesses to compare quotes from invoice finance providers so they can release the capital they need without delay.