Proposals to help firms with cash flow

As business conditions get tougher, Conservative leader David Cameron has told The Observer newspaper that the government should allow small businesses to defer paying their VAT bills for up to six months.

He also urged local authorities to pay small businesses for their services within 20 days, rather than the usual 30.

Delayed and late payments are a huge problem for firms managing their cash flow. On the other hand, anything they can do to postpone their own payments is welcome.

As quoted by the BBC, Mr Cameron said: “Britain’s small businesses need our help … we intervened to prevent the beating heart of our economy - the financial system - from collapsing. We’ve got to do the same for its lifeblood … small and medium-sized businesses employ over 13 million people and turn over £1,440bn a year.”

Meanwhile, the Chief Secretary to the Treasury has called on banks and building societies to be more lenient on home owners who default on their mortgages. A rising tide of repossesions would have a big impact on business, not to mention householders.

Whether banks or the government can afford these proposals is of course an important question!