Posted on 06-01-2010 at 08:30
“The North East is illustrating how businesses, local and central government can work together to ensure our firms benefit from the support available now and to help them come through the downturn stronger,” Trade, Investment and Small Business Minister Lord Davies said today.
Thousands of firms in the region have already taken advantage of business support, loans and tax deferrals - and local authorities have led the way in prompt payment to ensure vital cash flow for local companies. The North East is the first English region to see 100% of its local authorities signed up to the Government’s Prompt Payment Code and committed to paying invoices within ten days.
Business support for North East firms
Local firms have benefited from the real help measures put in place to help businesses come through the economic downturn:
Time to Pay – £121 million of North East business tax payments have been deferred through the Time To Pay scheme (assisting local firms with 7,530 cases of tax deferral). The scheme, allowing firms to spread tax payments, was extended in the Pre-Budget Report for as long as it is needed.
Enterprise Finance Guarantee Scheme - 249 loans have been offered to North East businesses bringing £24.1 million to the local economy. In his Pre-Budget Report, the Chancellor announced the Enterprise Finance Guarantee scheme for loans to small businesses would continue for a further 12 months.
Free Business Health Checks - 5,769 local businesses have taken the opportunity for a free Business Health Check – a free review of their business by a professional Business Link adviser for hands on advice and help accessing the full range of government help.
Prompt Payment Support – All 12 local authorities in the North East are committed to paying invoices within 10 days - following a call in July by Regional Development Minister Rosie Winterton for local authorities and regional businesses to sign up to the Government’s Prompt Payment Code. The Code aims to ensure the cash flow vital for small firms and commits organisations to pay suppliers on time, give clear guidance on payment and invoicing and to encourage good practice.
Better Invoicing - Analysis of supplier invoices held by Experian indicates that suppliers can help improve speed of payment themselves by invoicing correctly and on time. Over 107,000 copies of the Institute of Credit Management’s Managing Cash Flow guides have been downloaded this year. The guides provide a quick reference to the basics of customer, invoicing and cash flow management.
Improvements in payment performance
In November, the Forum of Private Business reported that the average payment time for local authorities in England is now eighteen days, with 42% of all invoices paid within ten days. Government is taking the lead with nineteen out of twenty central government invoices now paid within ten days – an improvement of 24 percentage points since November 2008. £86 billion has been paid to business within ten days by central government since June 2009.
“Settling bills promptly can make all the difference to the cash flow of a small business.” Lord Davies said. “Government is playing its part - but every part of the supply chain must help ensure prompt payment to support our small businesses.”
“I commend the efforts of the local authorities in the North East in supporting their local suppliers through prompt payment, and urge both public and private sector to follow their lead,” he added. “As well as benefiting suppliers, paying promptly could benefit customers by helping firms to keep prices lower.”
In addition to local authorities, a number of companies and organisations in the region have already signed up to the Prompt Payment Code including Government Office for the North East, local NHS Trusts, Association of North East Councils and One North East.
Malcolm Page, Deputy Chief Executive at One North East, said:
“It’s never been more important for businesses, particularly small and medium-sized firms, to receive prompt payment for their services, so it’s great to see that the North East is leading the way in this practice. One North East also remains firmly committed to the Code with an average success rate of 99per cent of invoices paid within 10 days.”
Prompt payment remains a considerable challenge faced by firms and was responsible for some 4,000 UK companies closing last year. This year, businesses in the UK are expected to pay more than £180m in interest charges to banks for overdue payment.
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