April saw the introduction of the latest government aid package to help small and medium enterprises fight against bad debtors and late payers resulting in poor cash flow.
The Recovery Loan Scheme (RLS) is the most recent government programme to facilitate financial support for businesses affected by Covid-19 and supersedes all the plans previously announced.
According to GOV.UK, the RLS will ensure businesses continue to benefit from Government-guaranteed finance throughout 2021, though less substantial than its ancestor. The government has backed £75 billion of loans to date as part of an unparalleled £350 billion wider sustenance package.
Lynne Darcey Quigley, Founder & CEO of Know-it, commented: “The scheme appears to be undeniably the most flexible and easy programme introduced to assist businesses since the start of the pandemic. However, the RLS highlights the wider problem faced – late payments!
“Undoubtably a large proportion of SME’s will apply for this loan as a result of a mix of bad debt and late payers due to Covid-19. These businesses are encountering obstacles in controlling their cashflow, particularly in relation to late payments, they are extremely susceptible and have been severely affected by the crisis.”
The Chancellor of the Exchequer, Rishi Sunak, announced that the Recovery Loan Scheme will make sure that businesses remain able to access capital as the economy begins to open back up.
“Short-term business loans are intended to help businesses gain access to the finance they need until they can pay it back or refinance the debt. I completely understand we are operating from a new rule book since introduction of the pandemic; however, debt shouldn’t be used to finance long term debt. The focus for businesses should be to improve their credit control moving forward.”
Lynne concluded: “As the vaccine rollout appears to be hugely successful, allowing the economy to re-open, the problem of late payments and its overwhelming control on SMEs shows no sign of disappearing. It is vital business leaders are made aware of the tools and resources available to them, which can improve cash flow. Technology can make a huge difference for SMEs to ensure payments are made on time.”