Why the Small Business Commissioner’s terms can’t afford to stay

Confirmation this week, as if it were needed, that former small businessman Paul Uppal didn’t always see eye-to-eye with his government masters while he was Small Business Commissioner was actually quite painful to read. And not just for us experts who tackle late payment, writes Adam Home, managing director of Safe Collections.

It was probably worse if you’re a contractor bitten by late payment who had hopes Mr Uppal would enact a sea-change. It was probably worse still for a select few --  the brave candidates lining up behind the scenes to succeed him on a permanent basis as SBC.

The terms are telling

That’s because we think the terms of the Small Business Commissioner (SBC) are far from the finished article.

Firstly, it’s those terms -- according to all reporting I’ve read on the matter -- that led to Mr Uppal’s unceremonious departure. A conflict of interest was apparently covered by those terms, even though it’s a conflict many can’t work out. In fact, Mr Uppal was let-go because the SBC’s terms were reportedly breached by him providing his advice (free of charge) to help the set-up of a new initiative to help tiny traders resolve deadlocks with banks. Some might argue that it’s exactly what a 'Small Business Commissioner' ought to be doing.

Secondly, the SBC’s terms constrain who the commissioner can actually help. Specifically, the SBC will only take action on behalf of small businesses with less than 50 employees -- against larger businesses with more than 50 employees.

This is strange at best, restrictive at worst; given the fact that there are more than 5.6million businesses with fewer than 50 employees in the UK -- and less than 40,000 with more than 50 employees.

A Small Business Commissioner who can’t act against the smallest business debtors

Somewhere along the line, there has to be a lot of transactions happening small business-to-small business. Yet the Small Business Commissioner has absolutely no power over them. Many might argue that it’s exactly where a 'Small Business Commissioner' ought to be getting involved.

The SBC’s remit, terms and scope have a third aspect that needs revising. Or widening, perhaps. Because many cases that we take on as commercial payment collection specialists would be totally beyond the SBC’s reach. Again, many might argue that these cases are exactly the ones that the SBC should be intervening on. Or should at least lend its support to, in favour of the small business at their heart where they are seeking payment.

Two real cases involving contractors (neither could a SBC do anything about)

For example, in one recent case we handled liaising with the Insolvency Service, the contractor had proof from the end-client that all of their invoices had been paid by the end-client to the agency. However, when we forced the company into insolvency, the agency’s sole director and shareholder told the Official Receiver that she had not been paid.

Our contractor client gave the Official Receiver proof that all the payments had been made by the end-client, and proof that the agency’s director and shareholder had lied (repeatedly) about these payments. But despite looking like an open-and-shut case, we still don’t know if the Insolvency Service intends to take any enforcement action against the individual director involved! An SBC to step in here and press the strained Insolvency Service -- on behalf of the out-of-pocket small business -- would seem more than appropriate.

Unfortunately this is not an isolated case. In another recent case we handled (which, likewise, the SBC would be powerless to help out with due to its prohibitive terms), we were again chasing payments from an agency.

Hiding behind limited liability

We issued a winding-up petition and after the petition was issued, the agency-debtor tried to have their own company struck-off at Companies House! That action, in such circumstances, is a clear contravention of the rules of striking-off, as the objective was clear -- if they could shut down the business, the individual behind the agency would be protected by limited company rules from liability for the debts!

Also due to the protections that ‘Ltd’ is afforded under the law, it would mean that the agency company director is now increasingly unlikely to be investigated as an individual, or face any official, personal sanction for the actions which they took. This is somewhere else where we believe ought not to be off-limits to the Small Business Commissioner, but is.

My message to the (new) government

Whichever party triumphs at the December 12th general election, our hope is they realise that some of the small print specifying the Small Business Commissioner’s position – the remit, the terms and its brief to operate, needs a serious redraft. Otherwise Mr Uppal will be the first but not the last person to leave this potentially valuable post prematurely and with frustrations, for himself and on behalf of our microbusiness community which every political party looking for your vote claims to want to help.