It is an issue that affects many firms and once locked into extended payment terms it is very hard to pull a customer back to the 30 days written into the terms and conditions of most companies.

One man who knows a lot about the ongoing problem of late payment is Ian Carrotte of ICSM Credit Management in Somerset. He was responding to questions concerning the Prompt Payment Code which has been heralded by the Government as an answer to the problem many small and medium sized outfits suffer from. ICSM deal with many in the printing and wide-format printing industries and so have specialist knowledge.

He says: “The Prompt Payment Code is certainly most welcome. Anything that helps ensure bills are paid on time cannot be a bad thing. One of the biggest and most destructive maladies faced by our industry, more than most, is late payment of invoices. The main issue is fear that our customers will be annoyed by the fact that they are asked for payment when it is actually due.

“The debtor often holds all the cards. Even in a court of law the creditor has their work cut out trying to recover their money. The costs of recovering, especially relatively small debts are scary to say the least and all too often the supplier backs off for fear of compounding what is already a costly situation, after all why would they want to throw good money after what is perceived to be bad?”

Carrotte says that politicians could back up the code with a law as Germany is considering but they are engaged in “Gesture Politicking”, designed to grab a few headlines. He describes the Government’s stance as “limp wristed.”

He continues: “If this code became law that would be a different story altogether. We would all be on a level playing field. There could be no “commercial bullying” unless you were prepared to literally break the law. Simple, black and white. The Germans are almost certainly right on this one, prompt payment would help everyone in the supply chain.”

The credit management guru says that for now, and the foreseeable future, the best thing any business can do is look to its own business practises and policies, look to attend to their own weaknesses and defects.

His tips are follow recognised “good business practise”, ensure trading terms contain the correct clauses pertaining to payment of costs should the facility offered (debt) go beyond the mutually agreed terms.  He says to make sure those terms are mutually agreed (Signed), then subsequently maintained and enforced according to the agreement.

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