For any small business, managing cash flow can be our biggest challenge in trading. In the playground of ‘supply chain bullying’, personalities, relationships and ‘pick me first’ tactics are used to get your business top of the payment list to try and keep your own ship afloat.

So when a key customer ‘goes bust’ and you’re the small business that’s owed a substantial amount of money, your world can literally fall apart. As more than 30,000 SMEs are experiencing following the catastrophic collapse of Carillion.

Just two years ago, we were owed more than £20k from a client which unceremoniously closed its doors on the world – and on our unpaid invoices. Despite being one of the organisations that was owed the most, we were firmly the last on the list of those to be paid – appearing rows and rows behind the HMRC and the banks.

Fortunately, our financial loss was temporarily business changing, but not life changing.

I and many other small business owners, can clearly imagine the conversations, the desperation, the crisis talks that are happening behind the doors of small businesses who, it is reported, could be owed up to £1bn following the Carillion collapse. It’s estimated that some organisations have unpaid Carillion bills which were equivalent to 10% of their turnover.

Careers, mortgages, pensions, lives… the devastation is all too real for thousands of affected businesses and ultimately, their families.

Membership of a business support organisation like Bradford Chamber can offer something of a lifeline through advice and guidance on your rights – advice that is freely available through the legal helpline, while the network of businesses and contacts you are surrounded by means you should never feel alone in a crisis.

But the only true way of trying to avoid this desperate situation is to check a company’s credit rating before getting involved. When I look back on our experience, I can see the signs were there.  But their spontaneous approach, regular reassurances and approval of significant budgets made them seem, at face value, the dream client. But what ensued was a nightmare.

The repercussions of the Carillion cataclysm will have significant consequences throughout the SME community – a community which contributes to 51% of all private sector turnover in the UK (November 2017 Business Energy Industrial Strategy Business Population Estimates)

Let’s hope there is a positive somewhere in this situation and the lessons learned impact all of us, creating a turning point in the way we actively protect ourselves and re-evaluate the way we do business.



Image sourced from Pixabay.