Business group slams culture of late payment
The Forum for Private Business says that for smaller sign-making firms late payment is a major problem.
Tuesday, 22 Apr 2014 14:16 GMT
Late payers: a business group says there is a culture of late payment in this country
In the organisation's latest banking and finance survey, 23 percent of members reported an increase in late payment over the past year compared with just 3 percent who reported a decrease. While 29 percent have also seen an increase in the average number of days beyond the deadline that a payment is made late whilst 8 percent reported a decrease, and 19 percent have seen an increase in both elements of late payment.
Phil Orford of the Forum of Private Business, says: “Improving cash flow is the likely cause for late payment issues remaining static, despite lengthening payment terms. However, upwards of £30 billion remains tied up in late payments, costing a typical small business 130 hours a year to chase and meaning that a third are forced to seek external finance to cover the gaps in cash.
Some larger organisations have an unwritten policy of paying bills late while for others the culture of late payment is deeply engrained as the Forum of Private Business points out”
“The Government is mulling over responses to a recent late payment discussion paper, which revealed ample ideas for tackling the issue in a more robust manner including the reintroduction of compulsory reporting of company payment terms and practices, and annual checks for Prompt Payment Code signatories.
“It is essential that government uses the recommendations to introduce effective measures and accepts that it not only has a responsibility to play in this area but also that its increased action can also act as an important catalyst for better payment practices.”
This spring the European Commission introduced its UK Late Payment Campaign which aims to put in place strict time-lines and tough penalties for payment between businesses, and between businesses and public authorities. The directive says firms have “a statutory right to interest 30 days after the date of the invoice, unless another payment period has been negotiated in the contract.”
However, despite this and legislation under the Late Payment of Commercial Debts (Interest) Act 1998 and provision to take late payers to court in order to settle unpaid invoices many smaller firms and sole traders have problems in getting paid. Some larger organisations have an unwritten policy of paying bills late while for others the culture of late payment is deeply engrained as the Forum of Private Business points out.
Your views please on late payment and what can be done to online_ed@signlink.co.uk
