Anyone working in supply chain jobs will know one of the most significant challenges facing small businesses is chasing late payments for goods that have already been delivered.
Which is why the government today reiterated plans to join forces with small business representative bodies to free up the supply chain cash flow that poses major issues for the UK industry.
According to reports, members of the Small Business economic Forum (SBEF) have agreed to work together to develop new ideas and infrastructures to ensure payments are made in a secure and timely manner in future deals.
SBEF chair Mark Prisk welcomed the move.
"Large firms have a responsibility to ensure their suppliers are paid on time," he said. "These payments are vital to businesses in the supply chain which rely on contracts with larger firms to thrive and need confidence that they can plan for the future without worrying that payments will be late."
The SBEF signed a statement agreeing members would help oversee and implement the proposed Prompt Payment Code (PPC) first pitched by the Forum of Private Businesses earlier this month.
As part of the scheme, businesses will pledge to proactively agree payment schedules before delivery, raise complaints about late payments to PPC signatories and use electronic invoicing wherever possible.
It's hoped that such guidelines will help free up the flow of cash running from larger firms to SMEs, funding expansion and in turn boosting the UK industry.
Philip King, chief executive of the Institute of Credit Management, praised the business groups uniting as part of the scheme.
"Collaboration across businesses and with the support of the government is critical to tackling the vital importance of prompt payment," he said. "Prompt payment and treating suppliers fairly needs to become part of our business culture."
The expert also noted that prompt payment fosters loyal and long-term relationships between suppliers, which are mutually beneficial further down the road.