Time Finance is highlighting the continuing need for working capital support as the government moves to strengthen protections for small businesses facing late payments.
The proposed Small Business Protections Bill would introduce tougher rules around payment practices, including a 60-day limit on payment terms for large companies, mandatory statutory interest on late payments and stronger enforcement powers for the Small Business Commissioner.
The measures are designed to tackle a problem that has affected UK SMEs for decades. Previous attempts to improve payment behaviour have included late-payment legislation, the Prompt Payment Code and mandatory reporting requirements. Despite these measures, many smaller businesses still face delays between completing work and receiving cash.
That gap can put pressure on working capital. Businesses may need to cover wages, suppliers, rent and other costs before customers settle their invoices. Even profitable companies can therefore face cash flow pressure when payments arrive later than expected.
The new legislation could improve the position of smaller suppliers, but stronger legal rights may not be enough on their own.
Many SMEs rely heavily on larger customers and may be reluctant to challenge late payments if they believe doing so could put future business at risk. A company may have the right to charge interest or take action over an overdue invoice, but the commercial relationship can make that decision more difficult in practice. This means the success of the proposed reforms will depend partly on whether payment behaviour changes across larger organisations, not simply on whether new rules are introduced.
That leaves a continuing role for funding providers that can help SMEs manage the timing gap between issuing an invoice and receiving payment.
Time Finance provides Invoice Finance, allowing businesses to access cash linked to outstanding invoices before customers have paid. The product is designed to reduce the pressure created by long payment cycles and give businesses greater control over cash flow.
Time Finance plc (LON:TIME) is an AIM-listed business specialising in the provision or arrangement of funding solutions to UK businesses seeking to access the finance they need to realise their growth plans. Time Finance can fund businesses or arrange funding with their trusted partners through Asset Finance, Invoice Finance, Business Loans, Vehicle Finance or Asset Based Lending.
