One of the biggest issues facing small businesses, particularly in the early days when they are still getting used to new clients, is not being paid on time. More than 50% of SMEs said that considered their future to be in jeopardy because of this problem, in a survey by Dun & Bradstreet, which also found that the average SME is owed around £63,881 in late payments.
There are a few standard things businesses can do to try to get paid promptly on completion of a job, including invoicing in advance, asking for a deposit to be paid upfront and invoicing immediately on completion of a job. Ultimately though, there is no guaranteed way to force a creditor to make payment at the end of a project, short of legal action.
For many, the arduous process involved in taking a late payment case to a small claims court means that many businesses just allow the situation to drop. But, in doing this, you not only do yourself a disservice but also allow that client to go on and do the same thing to other businesses. Luckily there is another step that you can take, before you have to think about going to court.
In 2017, the government created the role of the Small Business Commissioner (SBC), an independent public body whose job it is to ensure fairness for the UK’s small businesses. The SBC estimates that if all of the UK’s small businesses were paid on time, this would boost the economy by £2.5 billion annually.
Although the SBC doesn’t have the legal right to order a client to pay you, it can offer advice and help to resolve disputes in a more formal way than you can on your own. If you do find yourself in a position where you need to take non-payment of an invoice to the next level, this is the best next step.
How to complain to the Small Business Commissioner
Before you can complain to the SBC, you need to make sure that you are entitled to do so. The Small Business Commissioner is for small businesses complaining about larger businesses only.
This means that you need to be a company with less than 50 employees to get help from this service, and you will also need to be complaining about a company which has more than 50 employees and a UK office.
If your company currently has more than 50 employees, the SBC may still hear your complaint if you had fewer than 50 employees:
- When the payment was due
- On average in your last tax year
- On average so far in the current tax year, if you are more than 6 months into the year
- On average since your business started, if your business started 6 months ago or less
Complaints the SBC can deal with
You can only make a complaint about a payment:
- That was due within the last 12 months
- That you have tried to resolve yourself with the client
BUT the SBC will still hear your complaint if:
- You have not tried to resolve the problem with the customer because doing so would have damaged your business
- The customer has stalled so that you did not have the opportunity to complain within 12 months
Complaints the SBC cannot deal with
- Any complaint which is currently under legal action
- If your customer is refusing to pay because they are unhappy with the price
- If you’ve already had a legal decision from a court or other official body
- If your customer is in the public sector
- If your customer is a supermarket
- If you are in the construction industry and not working for a private residential occupier
If yours does come under the list of complaints the SBC cannot deal with, there are still options that you can take.
- Mediation services offer you and your client an unbiased service in which you can discuss your complaint and get help to come to an agreement. The small claims court will usually provide mediation for free if you decide to go down that route.
- Arbitration offers you a legally binding official decision on your complaint, which is settled out of court. Tribunal members will usually be appointed by the parties involved but are governed by law so the decision is fair and unbiased.
- The small claims court is the final option for these sorts of cases and is worth going to if the money owed if substantial, but should always be the last resort for small businesses as you will need to pay legal fees and can only sue for up to £10,000.
How to send a complaint to the SBC
You can email the Small Business Commissioner at firstname.lastname@example.org, or call 0121 695 7770.
Your complaint should include:
- Your business name, address and contact details
- Your client’s business name, address and contact details
- How much you are owed
- When payment was due
- What payment agreement was in place
- A summary of the goods and services supplied
- A summary of attempts you have made so far to resolve the problem
What will happen next
The SBC will send an automatic reply so that you know that your information has been received, and this will be followed up with a personal response within 2 business days to let you know if your complaint is able to be dealt with.
You will be assigned a caseworker who will speak with both you and the other party separately, gather any evidence that you have and discuss the situation. Your caseworker will update you regularly as the case continues and respond with a final decision within 4 to 6 weeks.
Your decision will explain what the SBC has decided and why, and any next steps that they recommend that you take. If the SBC decides to make details of your case public, they will not include any information that could damage your business.
Talk to TFMC about late payments today
Having systems in place to flag up late payments is probably the most effective way to tackle this particular problem. The more time you have to communicate with your client about potential issues and how they can be resolved means that you are less likely to find yourself having to resort to more drastic measures
Why not speak to TFMC’s helpful advice team today to find out how we can equip your business with an easy to use software platform that makes managing your invoices and getting them paid quickly a hassle-free experience. Call us on 0800 470 4820 or email email@example.com to find out more.