Member Article

New campaign to tackle late payments

Business Minister Mark Prisk has announced a push by the Government to combat late payments to suppliers.

The campaign recognises the importance of prompt payment for SMEs, and will help businesses to make sure they are paid on time.

A new group of businesses representatives will examine the issues behind late payment, while the Association of Chartered Certified Accountants have published a guide on prompt payment.

The ‘Finance Fitness’ scheme will encourage SMEs to tighten up their payments, by signing up to the Government’s Prompt Payment Code, run by the Institute for Credit Management, representing an estimated 60% of supply chain value in the UK.

It will also promote the benefits of electronic invoicing, and how to raise complaints over late payment from Code signatories and use legislation already in place to help companies pursue late payers.

Mr Prisk said: “It is hugely important that all businesses, particularly small firms, establish clear payment terms to ensure they get paid on time and successfully manage their cashflow.

“There is practical information available for businesses on getting paid that we are promoting to small firms through our Finance Fitness campaign, and this new guide published by the ACCA contains clear, helpful advice. I want small businesses to use this information and set up appropriate payment terms.

“The Government is already setting a strong example by paying 80 per cent of invoices within five days and the Prompt Payment Code is encouraging best practice.

“What’s more, we have secured the agreement of business representative bodies to come together and establish a prompt payment workshop, to explore these issues more fully and develop business-led solutions. We must continue to promote prompt payment to ensure our small businesses can thrive and grow.”

Online invoicing specialists Tradeshift have conducted research that reveals 13% of invoices issued by growing UK businesses remain unpaid every year, creating a £1.4 trillion hole in the economy.

Elsewhere, it was found that businesses spend an average of 25 man hours a week chasing their invoices, and 32% of invoices are still received via post.

Phil Orford, Chief Executive of Forum of Private Business, said: “I’m pleased to see getting paid on time being given the attention it merits as a vital aspect of small businesses’ cash flow management.
“We take this subject very seriously and the Forum of Private Business has issued a call to action on late payment issues, indeed, we offer our own Credit Control guide and debt management guidance, and it is important that we put these matters front and centre and ensure small and medium sized enterprises understand what measures they can take to prevent late payment issues arising, and dealing with them when they do.”

Philip King, Chief Executive of the Institute of Credit Management, added that getting paid on time is a challenge across all industries and sectors.

He said: “There is plenty of help out there, not least through our own Managing Cashflow Guides that we published with BIS and continue to revise and update, but what is essential is ensuring that small businesses, in particular, are aware that they are not alone, and that best advice is only a phone call or a mouse-click away.”

This was posted in Bdaily's Members' News section by Tom Keighley .