Government to launch new ‘concilliation service’ to help small businesses » SMEInsider

Government to launch new ‘concilliation service’ to help small businesses

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The Government will set up a new ‘Small Business Conciliation Service’ (SBCS), which will act to resolve disputes between small businesses and their large-firm clients. Particular focus will be on late payments.

The SBCS was part of the Conservatives’ pre-election manifesto, and it will be included in the new Enterprise Bill that will be featured in the Queen’s Speech next week.

“The purpose is to avoid expensive legal costs and maintain business relationships by reaching mutually satisfactory agreements. This model has worked in Australia and we will explore it, and other models, and find what works best in the UK,” said Sajid Javid, the Business Secretary.

The bill will contain business-friendly legislation that reinforces the Business Secretary’s commitment to improving the future for small businesses. It is expected that the bill will, in Javid’s words, “sweep away burdensome red tape… [and] get heavy handed regulators off firms’ backs’.’

From next April, large businesses will be required to publish information on their payment practices on a biannual basis. The new bill will also reveal the Government’s plans to cut down on how much it costs businesses to comply with regulations. It hopes to the reduce the cost by as much as £10 billion over the next five years.

“In 2008, late payment alone cost British businesses £19 billion. This year, that’s set to exceed £40 billion. The average amount owed to a small business is more than £30,000. You know as well as I what figures like that can do to the cash flow of small businesses – it’s enough to force a company into insolvency,” Javid continued.

  • Jim Shields

    What time-wasting, pussyfooting bullshit. PLEASE Introduce a law that says companies MUST pay businesses under 10 people in 30 days or get fined. The fines go into a fund and this fund can be drawn upon to lend to small businesses as working capital (as banks hate doing this). If you think you need conciliation, it’s way too late.

  • Gary Pettit

    As both an insolvency practitioner and a CEDR Accredited mediator I have witnessed the pitfalls of the small firm trying to trade with the large enterprise; it has in the majority of those cases ended up in expensive tears!

    While I welcome the principle of SBCS, my reservation is whether it will carry authority or just end up being another bureaucratic toothless tiger. As with most things in life the devil will be in the detail and I wonder if there will be any reporting process post mediation? If a mediator was obliged to forward a summary of the case before him to the Secretary of State any regular offender would soon come to the fore where it is hoped the Secretary of State has powers of imposing sanctions AND where appropriate, publishing the sanction, citing the reasons.

    On a practical level, when I ask directors of SMEs why did you carry on working for the big company all too often it is because they are contractually obliged or the veiled threat of losing all work with that company is laid upon their doorstep. One company I helped were owed almost £700K by a large company that ultimately went into administration. The SME was a £1.3 million turnover family business who were held to ransom and then were pulled down as a victim of the big boy mentality. What I am getting to is that even if SBCS was in place will it actually be utilised, primarily because of the (SME) fear of losing that contract or business relationship.

    Hopefully, when setting this up the Government will consult people on the ground because “Vote winning” theoretical policies often end up an an expensive and embarrassing white elephant!