Here at Commercial Domestic Investigations we know that managing cash flow is key for small and medium enterprises. We’re always on the lookout for any news surrounding late payment, as we know this is one of the top contributors to any cash flow problems.

Recently The Guardian reported on how the Australian model for tackling late payments could be used to help small UK suppliers.

Following in the footsteps

In the UK alone there is £55bn owed to SMEs, and up to 23% of SMEs have had to consider insolvency because of payment issues. As small businesses in the UK are owed on average £12,000 each, Westminster recently committed to tackling the problem by appointing a small business commissioner. The Federation of Small Businesses has welcomed the appointment, claiming it is a “step in the right direction”. However it was stressed that the commissioner must be forceful if the model is to be successful.

This model has been implemented in Australia since 2003, initially set up to help solve retail lease disputes. Today these make up around 60% of the caseload, with the remainder being general business cases.

Hard but fair

The Victorian Small Business Commissioner Office’s annual report for 2014-2015 showed an 81.7% success rate of settling cases at mediation, and one in four disputes settled before mediation even begins. Of the cases that do not settle, only an estimated 50% go to court.

Geoff Brown, who has been running the Victorian Small Business Commissioner Office for almost five years, says “Managing cash flow is probably one of the biggest challenges for any small or medium-sized business. And it’s particularly problematic when you’re in the middle or at the end of a contract chain. You go to your customer and say, ‘Where’s the payment?’ and their response is ‘Well, I haven’t been paid yet’. And so the argument goes on”.

Engagement is key

Over the years there have been some major changes in the office. Their main problem was getting the respondent business to engage. However, amendments to the Small Commissioner Act in May 2014 helped to improve cooperation significantly. One of the changes was to the Small Business Commissioner’s website, making it more approachable and empathetic.

“It has absolutely had an effect,” Brown says. “Up until May 2014, there was no consequence if a business refused to engage with us. We couldn’t do anything about it. Now, the number of those who refuse has dropped from 15% to 5% in a year, and the number of businesses that we couldn’t locate halved. Businesses were responding to us, and we have also been settling a lot more small claims pre-mediation.”

If you’re an SME owner who is struggling with unpaid invoices and late payment, contact us for an informal chat about how we can help you. Our team have the experience and knowledge to help your company recover money owed. Working with our debt collection team gives business owners the peace of mind needed to move forward and get past negative cash flow.

About Commercial Domestic Investigations

Commercial Domestic Investigations are regarded within the debt collection and credit control industry as one of the best credit management companies in the UK. Established in 1988 to support and service all sizes of companies in the field of Credit Management.

Commercial Domestic Investigations have recently featured in the press in The Guardian. To keep up to date with the latest debt collection news make sure to follow Commercial Domestic Investigations on Facebook, TwitterLinkedIn and Google+.

We now boast a national client base in excess of 30,000 companies. Commercial Domestic Investigations has grown by listening to clients’ requirements and adapting our services to meet all companies’ needs from Sole Traders, SMES, Ltd and Plus. Please contact us on 08444 159200 for more information.