In an unexpected turn of events, the Mayor of London has extended his apologies over a delay in payments made to small businesses by City Hall.
With more than a quarter of payments to suppliers running late, it’s clear there is a problem that needs to be addressed.
Addressing the Late Payments Issue
During a recent session of Mayor’s Question Time, Peter Fortune, the Conservative London Assembly Member for Bexley and Bromley, raised the issue of late payments.
He revealed that City Hall had fallen short of its target to make 90% of payments on time each year since the current Mayor took office.
Fortune pointed out that the proportion of payments made on time in 2021-22 was 79%, implying that about £16.5 million was withheld from small and medium-sized businesses that year.
The figure fell even further to 74% in 2022-23, marking the lowest recorded since the figures were first tracked.
The Impact on Small Businesses
The importance of cash-flow for small businesses, particularly in the challenging times following the pandemic, was also emphasised during the discussion.
The Mayor of London, Sadiq Khan, recognised the severity of the issue and how it was negatively affecting businesses.
He admitted that the ongoing problem of delayed payments was unacceptable, even if the difficult years of the Covid pandemic were taken into account.
Khan further acknowledged that cash-flow problems could mean the difference between small businesses being able to pay their bills or not, an issue he described as a cause for personal distress.
In response to these issues, the Mayor made a commitment to personally investigate the matter, expressing his regret to those businesses affected by the delayed payments.
He also indicated his willingness to meet with Fortune in the following week to examine the issue more closely and explore possible solutions.
Response from the Federation of Small Businesses
The issue of late payments to small businesses was not new to the Federation of Small Businesses (FSB).
Laura Timm, the FSB’s London policy chair, expressed her disappointment that a quarter of small firms were suffering from late payments by the Greater London Authority.
She emphasised that the GLA should be a role model in demonstrating best practices in this area.
According to Timm, businesses already faced tight cash flow situations, and the delay in invoice payments was a significant obstacle to their growth and investment.
Given this, she has advocated for improved payment practices and suggested the idea of making London a ‘Prompt Payment Zone’.
The Path Forward
The Mayor appears to be taking steps to rectify the issue, with his proposed meeting with Fortune expected to focus on finding practical solutions.
This comes at a time when the economic climate is especially challenging, and when the survival and growth of small businesses depend heavily on prompt payment practices.
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