The new Conservative government has acted swiftly on pre-general election pledges to tackle late payments.
In its manifesto, the party promised to establish a new Small Business Conciliation service to mediate in disputes, especially over late payment.
And the Queen’s Speech on 27 May, which set out the government’s proposed legislative programme, detailed plans for an Enterprise Bill, including establishing the new service.
Speaking earlier in May, new Business Secretary Sajid Javid said late payment was set to cost British businesses more than £40 billion this year, with the average amount owed more than £30,000.
He said: “Now, we’re going to widen the powers for representative bodies to act on behalf of their members to challenge grossly unfair payment terms. There’ll be a consultation on this later this year.
“And we will fulfil the manifesto pledge to set up a Small Business Conciliation Service to help small businesses settle their problems with large corporations.”
He said the aim of the service was to reduce the cost of resolving disputes and to maintain business relationships by reaching “mutually satisfactory agreements”.
Mr Javid added: “This model has worked in Australia. We will explore it, and other models, and find what works best here in the UK.”
Earlier this year, research by payment processing specialists Bacs revealed that more than three quarters (76 per cent) of UK businesses were being forced to wait at least a month beyond their agreed contract terms before getting paid.
One in ten were experiencing at least one late payment-related challenge every month, including difficulties in paying staff on time or in paying regular bills. Almost a quarter (23 per cent) said late payments were forcing them to delay paying their own suppliers.
At Palmers, our Insolvency services include advising creditors on the most appropriate way to seek payment due, including through the use of statutory demands. If the debt is not paid, or there is no agreement to pay within 21 days, whoever issues the statutory demand can then initiate the winding up of a limited company if the amount owed is more than £750.
We understand that creditors want to ensure that it is cost-effective to pursue debts and offer a fixed fee appointment of up to one hour at a cost of £125 + VAT, to explore options for debt recovery and identify the best way forward.
For more information, please contact our insolvency Specialists Andrew Skinner.