THE Scottish Parliament’s economy, jobs and fair work committee has heard that investors and enterprise agencies should focus less on “vanity” funding and more on how much revenue companies are generating.
Speaking to the committee, Alison Grieve, chief executive of G-Hold, also said investors in Scottish businesses tended to “back winning horses” by concentrating on sectors such as software-as-a-service.
“There is much less of a focus on people actually selling their products and services, and more on how many staff they employ or how much investment they’ve have managed to bring on board,” she said. “That is a failing in Scotland right now. If we’re not focused on the actual revenue taken in through sales of goods and services.”
When asked who she was referring to, she said: “It’s the investment community, the agencies, pretty much any route to funding, it feels that it’s a lot more about ‘are we going to be the next Facebook and get massive investment rounds on board’.
“It’s become more a vanity thing than actually are we doing business with real life companies outside of Scotland. It’s a massive problem, there should be a focus on bringing in sales more than anything else if we are going to reduce our trade deficit.”
Paddy Collins, chief executive of Aubin Group, told the committee more work was needed to ensure large businesses pay smaller suppliers within agreed timescales.
Calling late payments “reprehensible”, he called for companies to be “named and shamed”.
“Companies should be required to release details of when they pay, they have the information so it wouldn’t be expensive,” he said. “It would make a very significant impact in helping small businesses.”
Mr Collins said clients deferring payment was tantamount to the supplier providing an interest free loan, which prevented their own investment.
“Profit is not nearly as important as cash. If we get paid on time we can invest, and we can employ,” he added.
The panel also discussed the challenges facing firms operating in lower-profile sectors, such as hardware, with Ms Grieve asserting her believe that some sectors are favoured by investors. She said: “I can understand the need for a small country like Scotland to back certain winning horses, certain categories who benefit from investment coming to Scotland… [but] sometimes that’s at a loss to companies who sit outside those categories.”
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