However, they face a myriad of issues navigating the world of public procurement processes. Simply put, it can be costly, complex, and overwhelming for those not familiar with them, and time-consuming for those that are.
On top of these barriers, SMEs can fall victim to late payments and long payment terms for services provided. This creates a vicious cycle – late payments threaten the financial stability of smaller businesses and prevents them from being able to bid for future opportunities.
Prompt payments in the spotlight
In December 2022, the UK government undertook its Prompt Payments Review and revealed that in that year alone SMEs were owed on average £22,000 in late payments - with 50,000 SMEs going out of business each year referencing cash flow as a cause.
It found that small businesses are hesitant to challenge and set better terms, and lack the experience or resource to chase payments. This all adds up to 56.4 million hours wasted each year in the UK by businesses chasing late payments. SMEs shouldn’t be chasing payments; they should be focused on serving their customers and growing their businesses.
The Government has recently committed to ensuring that companies bidding for over £5 million worth of contracts will have to demonstrate payment by 55 days, tightening to 45 days in April 2025. Similarly, Labour has pledged to legislate to require big businesses to report on their company’s payments practices in annual reports.
Whilst these long-term commitments are welcomed, smarter procurement of services can improve the accountability of larger businesses and boost the financial stability of SMEs in the here and now. It can also help businesses that look at these targets and want help in building upon and surpassing them.
Bloom are making it happen
At Bloom, we know that rapid and assured payments are vital for the growth and prosperity of small businesses.
Bloom ensures small businesses are paid promptly, giving them the confidence to work with large clients. Via our NEPRO³ framework, we are proud to have made 7,258 payments last year, with an average payment time of 27.50 days.
We deliver this without adding more work for SMEs or clients. In fact, we remove the work by combining our data-driven marketplace and team expertise to provide clarity and help businesses focus on delivering. This creates fast and sustainable payments that set the standard for industries, meaning clients and suppliers can focus on impactful outcomes, not procurement.
Throughout the pandemic, we worked hard to ensure that payments to suppliers were promptly actioned, paying out over £80 million worth of early payments across the supplier chain, ensuring they had the funds to be able to carry on with business as usual through such a testing time.
By taking the stress of late payments away from SMEs, we strive to create a level playing field when bidding for public sector contracts. If you’d like to hear more about how we can help your business, please get in touch.