A portion of the blame for the failure and struggles of small businesses was heaped at the feet of the Government on Monday 23 May in a statement that was posted by Leader of the Opposition, and Third District Representative, Hon. Julian Fraser.
In his statement Hon. Fraser accused the government of causing small businesses to suffer cash flow shortage: “For small businesses cash flow is king and enables companies to purchase inventory and cover payroll and operating costs. However, many of our British Virgin Islands based independent companies are experiencing weak cash flow due to an extended accounts receivable cycle, and sadly enough, government is the main culprit,” he said.
“According to my sources and even small business executives, ‘Government together with some of its Statutory Bodies pinch suppliers on payments’, by adding weeks to the amount of time it takes to pay their suppliers. This strategy is creating a ripple effect among their smaller suppliers,” Hon Fraser said.
He further stated that those affected includes small businesses, and contractors. The Legislator also noted that the cries of the business owners began before the elections of June 2015.
“Individuals have been complaining about Government’s insensitivity to their plight of not being paid moneys owed, and despite it being a campaign issue Government remained oblivious,” Hon. Fraser announced.
The Leader of the Opposition added: “As if the problem of delayed payments – which is reported to be as long as six months in instances, wasn’t enough, government opted to add another burden of seven half percent of employees income for the mandatory National Health Insurance on these same Small Businesses.”
Hon. Fraser noted that last month Government passed a motion to open a line of credit that is aimed at paying bills, however he noted that to date businesses are crying out that they have not been paid.
“In the House of Assembly the Opposition rightfully expressed distrust with the government when they moved a motion to borrowing $25 million from CIBC First Caribbean Bank, ostensibly as a line of credit to payoff these very small businesses for services rendered that has been owed for months, and promised to keep their accounts payables current. Evidently, the Opposition was right, for businesses are still not being paid and are complaining,” Hon. Fraser pointed out.
“Since many of the suppliers to government are small businesses, they may carry an additional cash burden due to slim availability of bank loans or lines of credit. Additionally, small businesses have little bargaining power when dealing with government and are forced to accept more lengthy terms. This can have a devastating impact on suppliers that are already strapped for cash, seeing their costs rise, and squeezing funds that could otherwise be spent on growth or hiring,” the Leader of the Opposition explained.
He added that employers said that they are holding on to their employees out of compassion, knowing that they have responsibilities and are in need. “But if government continues to exhibit this lack of regard without cease, they will be left without choice but to let their employees go, or worst, shut down their business.”