Monday, 01 December 2014 15:02

Pay promptly for Small Business Saturday

This Saturday December 6th is Small Business Saturday, an annual initiative to support small businesses throughout the UK, and it's not just about visiting your local independent gift shop.

Much of the focus will be on the nation's high streets and town centres, where free parking and special offers will encourage many people to finish off their Christmas shopping at small independent retailers.

But small businesses exist in every sector, not just retail, and it's equally important to focus on the things that can keep all of these valuable contributors to the UK economy in good financial health.

For instance, in a blog post on the Small Business Saturday website, Stephen Allott, Crown Representative for small businesses in the Cabinet Office, stressed that the government wants to choose SME suppliers wherever possible, if they provide the best value for money.

"This is the example we want to encourage across the public sector - getting best value from small businesses," he said.

"So that's why new legislation coming into effect in early 2015 will further open up the public sector's £187 billion spend on goods and services."

Quick and Easy

Key to achieving this aim is ensuring small businesses are able to compete for contracts against the 'big boys' of business.

For instance, the new legislation should remove pre-qualifying questionnaires where possible, so small firms will not be eliminated unnecessarily from the tendering process.

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Advertising opportunities more publicly, and making sure they are open to the right sizes of supplier, are also in the plan for the new year.

Crucially, prompt payment 'within 30 days' throughout the public sector contract supply chain should mean small firms bidding for business are not crippled by 'big boy' payment terms like 120 or even 180 days.

Lead by Example

Mr Allott pointed to a recent case study presented at a conference for commercial leaders in government, organised by the Cabinet Office.

Kainos, one of the successful SMEs present at the conference, told their story of successfully bidding for work on the Driver Record System.

Against an expected cost of £25 million over two years, they were able to deliver it in 18 months, at a cost of £9 million.

Kainos have now grown from being a small business in 2012, to having 700 staff now, with more government-based customers off the back of their work on the Driver Record System.

It's an example of how working with small businesses can have its advantages, in terms of budget, turnaround time and flexibility.

And by treating small business suppliers fairly on payment terms, everybody wins - the supplier receives what they are owed, and are able to reinvest it into meeting subsequent orders and future contracts.

With Small Business Saturday upon us, there's no better time to recognise the contribution made by the UK's fledgling firms in all sectors, as well as those that have been around for years and are stable and happy at a relatively small size.

Hopefully 2015 will bring with it a good rate of prompt payment in the public sector supply chain - and perhaps greater appreciation for small firms in the private sector too - for the mutual benefit of suppliers, customers, and the economy as a whole.

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