Government backs consultation to tackle late payment
Daniels Silverman has broadly welcomed news of a Government backed initiative to tackle the problem of late payments to small and medium sized enterprises (SMEs) which is set to reach consultation stage later this year. Sadly, it has become a business reality that invoices and debts are rarely paid on time and a recent YouGov […]
Daniels Silverman has broadly welcomed news of a Government backed initiative to tackle the problem of late payments to small and medium sized enterprises (SMEs) which is set to reach consultation stage later this year.
Sadly, it has become a business reality that invoices and debts are rarely paid on time and a recent YouGov poll commissioned by Barclays Bank has revealed that as many as 85 per cent of SMEs have had problems with late payments in the last two years. According to the Bankers’ Automated Clearing Service this amounts to a total of £30.2 billion owed in late payments to SMEs during this year alone.
Prime Minister, David Cameron is backing the consultation which will look at:
- Encouraging senior managers to take greater responsibility for payment policy.
- Increased transparency around which companies are prompt payers and which aren’t.
- Strengthening the Prompt Payment Code (PPC) so that companies can be held accountable to better enforce existing legislation.
- Encourage more companies to use their statutory right to add interest to late payments.
The Government backed consultation will evaluate existing legislation and consider whether or not there is a case for the introduction of further legislation or penalties, and if more can be done to promote new services, such as electronic invoicing and mobile payments.
Currently the PPC aims to ensure prompt payment for suppliers. Around 1,400 organisations have signed up to this to date. Signatories to the Code commit to paying their suppliers within clearly defined terms, and commit also to ensuring there is a proper process for dealing with any issues that may arise. This means that suppliers can build stronger relationships with their customers, safe in the knowledge that they will be paid, and confident that they are working with a business that values the service they deliver.
Daniels Silverman Director, Stephen Ward, commented: “Prompt payment is critical to the cash flow of every business, and especially to smaller businesses within the supply chain. But it is not just prompt payment that is important, but rather the certainty of getting paid that is really important, and enables businesses to plan both for their short and longer term futures.
“At Daniels Silverman we help many companies to reclaim debts which in some cases may have accumulated over a considerable time, using a variety of legal collection tools at our disposal. The commitment of the Government to help better introduce business practice in this area is broadly welcomed and I look forward to seeing the conclusion of their consultation on this matter.”