Late payment lobbying update
23 January 2012
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Small firms are struggling against a rising tide of late payment, most often caused by large companies attempting to create lines of credit at the expense of their smaller suppliers. Find out what we're doing to help small businesses fight back.
Recent research from Bacs suggests that small businesses are now owed a staggering £33 billion in outstanding invoice payments – a rise of 10% in just one year – with other data showing average late payment times are also increasing.
 
Late payment is in danger of becoming endemic to the culture of commerce. As part of our campaign to Get Britain Trading, the Forum is focusing on creating better payment practices so that small businesses are able to improve their cash flow.
 

New - late payment initiatives

We believe that any growth strategy, which in the current economic climate must necessarily focus on small business finance, has to address this important issue as a priority.
 
We're leading a late payment campaign involving many of the leading industry trade bodies, including the Institute of Credit Management (ICM), the Institute of Chartered Accountants in England and Wales (ICAEW) and the National Farmers Union (NFU), as well as major thought-leaders such as Graydon UK Ltd.
 
In a letter sent to the Business Minister, Mark Prisk, we called for a number of measures to tackle the late payment problem, including clamping down on large companies taking ‘prompt payment discounts' and imposing retrospective changes to payment terms and conditions that are not contractually agreed, and reviewing the Late Payment of Commercial Debts (Interest) Act 1998 so that more disgruntled suppliers are encouraged to charge interest on late payments.
 
We expect to meet with the Minister soon, but he has already written back to report that the Government is seeking to reform the Late Payment Working Group, a short-lived initiative from a couple of years ago that produced a well-received guide to managing cash flow and subsequently led to the development our own Credit Control Guide, and is also reviewing its overall strategy.
 
Mr Prisk also revealed a government paper on late payment is being prepared for the next Small Business Economic Forum meeting on 31 January, where we will discuss the issue with many relevant stakeholders and political representatives. However, it is important there is real action to help entrepreneurs, not simply more talk.
 
That is why we are backing the Government's ‘Get Paid on Time Day', which is scheduled to take place at the end of the month. Part of the coalition's emerging Finance Fitness campaign, the day aims to provide awareness, guidance and support for firms who want to proactively tackle late payers. As a leading small business support body, we will do all we can to empower our members to help themselves.
 

How we can help

We are also committed to continuing to expose large companies that pay late, or retrospectively change their payment terms and conditions with no real consultation with suppliers, via our late payment ‘Hall of Shame'.
 
We recognise that there is often a culture of fear surrounding ‘naming and shaming' late payers, but we are able to expose them while protecting the identity of our members. It is essential that members come forward to identify large companies that indulge in this behaviour and we can absolutely guarantee your anonymity.
 
In addition, the Forum's business helpline offers Intermediate and Advanced members support with late payment issues. For friendly advice and support, and to find out more about our Credit Control Guide and Hall of Shame, call us now on 0845 130 1722.


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