14th November 2013
A new business called Satago has launched to help SMEs and freelancers get paid on time by revealing the ‘good, bad and ugly’ of business-to-business bill paying. SMEs in the UK are paid 41 days late on average, creating enormous cash flow issues that the EU estimates causes 25% of company bankruptcies.
Satago will collect data directly and automatically from participating SMEs and freelancers on their actual experience of how larger companies have paid them. This information will be anonymised so participants need not worry about annoying their customers.
In return for this data, Satago will offer SMEs and freelancers reports on how well or how badly other businesses they are considering working for pay their bills. These reports will enable SMEs and freelancers to negotiate from a much stronger and more informed position, able to agree terms more appropriate to the reality they can expect once work and billing commences.
Satago is an online business and will operate by offering SME and freelancers the ability to ‘plug in’ their accountancy software securely to provide an automatic, direct but anonymised feed of their payment experiences. Satago’s IT will collate that data and its algorithms will generate reports on an ever-growing number of large businesses’ payment behaviours.
Companies’ overall “payment behaviour score” will be available to everyone for free, and detailed, granular reports will be available free of charge to those SME and freelance businesses that have provided their data to Satago, and at a modest fee for those small businesses that do not yet want to participate in providing data about their own experience.
Satago has shared its plans with the Department for Business, Innovation and Skills and other Government departments as well as relevant trade bodies such as the Federation of Small Businesses.
Steven Renwick, founder and CEO of Satago says: “Having suffered the challenge of late payment previously as a small business operator, I know first-hand how crippling this problem can be. We are excited about bringing Satago reports to the SME and freelancer markets as a powerful new tool, putting small businesses in a much stronger position through the transparency these reports will create. As our database grows – and the range of businesses covered grows ever larger, our efforts will put healthy peer pressure on big business to play much fairer with their suppliers.”
The Institute of Credit Management (ICM) that runs the Prompt Payment Code in partnership with BIS has welcomed the arrival of Satago.
Phillip King, CEO of ICM says: “Satago looks like a promising addition to the armoury of initiatives aimed at tackling the UK’s serious late payment issue. Clearly it needs to build up sufficient data, but with so many SME and freelance businesses struggling with late payment, Satago reports should encourage increasing levels of participation in the scheme. In time, alongside further enhancements to the Prompt Payment Code, greater use of the right to challenge a signatory’s status, and other measures, Satago could bring about significant new pressure on businesses to improve their payment practices, which in itself will help boost economic growth.”
Sue Terpilowski, London Policy Chairman of the Federation of Small Businesses says: “Late payment is an increasing issue for our members. Being paid late or given extended terms can severely hamper many small firms. They simply don’t have the same cash-flow buffer as a large businesses, so being paid on time can be the difference between being able to pay staff and not. Furthermore, when a small firm is paid late they then can become late payers themselves”.