With the collapse of Carillion leaving tens of thousands of people feeling vulnerable and a large number of contracted businesses at risk of none payment for work completed.
Those SMEs at the bottom of the food chain will be hung out to dry as they wait up to 120 days for payment or the worst case sinario of none payment of outstanding invoices.
The need to review payment terms and conditions for SMEs contracted by multinational companies which can be up to 120 days payment terms should now be reviewed for future T&Cs.
An agreed payment scheme within 30-60 days on completion of the contracted work being satisfactorily signed off should form part of a contractual payment scheme guaranteed by the financial institutions or a Government supported scheme.
Those entrepreneurs, innovators, job creators, game changers must be confident as a major player in the recovery of the UK economy.
Better financial support and understanding from the banks would be welcomed, no different to the financial crash of 2007/8 with government intervention survival package supporting the financial sector in their hour of need.
Business owners must also have the confidence to invest in apprentice training, staff development and capital investment for future growth as part of their future business plan if they are to survive and retain the skills.
SMEs enter in to the market place of a highly competitive tendering procurement system, with tight profit margins and financially stretched balance sheets has proven to be a recipe for disaster for the building industry as Carillion announced compulsory liquidation.
The lesson to be learned here for SMEs is not to put all theirs eggs in to one basket, a more pragmatic approach to tendering by SMEs if they are to survive and protect their business from a boom and bust model of uncertainty in today’s climate of smoke and mirrors business politics.
In these challenging times where successive governments have failed to incentivise the private sectors companies who hire employees who in turn need job security and peace of mind when they go home after a days work.
The uncertainty the stress of losing their jobs through actions that are beyond control “FORCE MAJEURE” should not be allowed to continue, business exists for profit prosperity and confidence to create jobs.
“FOR EVERY ACTION THERE IS A RE-ACTION” the reaction to this latest disaster will give a measure of how the private sector is seen in the eyes of those institutions, who believe in supporting the self-employed SMEs and true entrepreneurship, watch this space as matters unfold and we await the rescue package.
This blog was produced by Tony Moran, Co-Director of The Business Executive Club who meets every month at Denton Golf Club. Their ethos is Excellence through Experience.