Are Late Payments Affecting Your Business?
15 Apr 2019
Published in: Blog
Late payments can be disastrous for SMEs. If suppliers are not paid on correctly and on time, the consequences of further cash flow blockages can be catastrophic.
Philip Hammond, the Chancellor of the Exchequer, has recognised the issue recently. In the 2018 Autumn Budget and 2019 Spring Statement, the Chancellor made the right noises on late payments, pointing to the Federation of Small Business’ (FSB) #FairPayFairPlay campaign. The devil is in the detail, as with all government announcements, but there is a welcome recognition by government that this cannot continue to happen.
The Black Country Chamber was particularly close to the issue in 2018. After the liquidation of Carillion, whose headquarters sit in the heart of Wolverhampton, we launched a helpline for affected supply-chain businesses. Some of the stories were incredible, with payments as late as 6-months. We also heard that due to Carillion’s poor payment practices, small businesses owners were having to use other means, such as re-mortgaging houses.
I am affected, what can I do?
Speak to somebody. This could be your local Chamber of Commerce or another business representative organisation who can help. The late payment cycle is a vicious one. We know that some small businesses will not dare speak out about late payments due to a fear of being withdrawn from future tenders. This is wrong, but wholly reasonable, given the attitude of some larger companies.
Recently, we have dealt with a specific case, that of a Black Country Chamber member. Our first port of call is to directly contact the Small Business Commissioner and ensure that the Office for the Small Business Commissioner are aware of the case, have appropriate evidence about the late payer and the small business affected. The Federation of Small Businesses are also campaigning on this issue and have a dedicated section on their website - https://www.fsb.org.uk/standing-up-for-you/our-campaigns/fair-pay-fair-play
The Chamber’s advice is and has always been to vary your contracts and to not put all your eggs in one basket. This is not a new issue, but a longstanding, cultural one, that means it is somehow appropriate not to pay smaller suppliers on time.
What the Government Says
“You can claim interest and debt recovery costs if another business is late paying for goods or a service. If you agree a payment date, it must usually be within 30 days for public authorities or 60 days for business transactions. You can agree a longer period than 60 days for business transactions - but it must be fair to both businesses. If you do not agree a payment date, the law says the payment is late 30 days after either:
• the customer gets the invoice
• you deliver the goods or provide the service (if this is later)”
Small Business Commissioner - https://www.smallbusinesscommissioner.gov.uk/
Business Support Helpline (England)
Telephone: 0300 456 3565
Monday to Friday, 9am to 6pm
Money Claim Online https://www.gov.uk/make-money-claim
Written by Black Country Chamber, Policy Officer, Daniel Turner.
No comments have been submitted yet.
Post A Comment
You must be logged in to post a comment. Please click here to login.