New calls to help small businesses with late payment issues - Palmers Solicitors

New calls to help small businesses with late payment issues

New calls to help small businesses with late payment issues

A campaign to crack down on late payment has received support from Small Business Minister, Margot James, who has called for the payment of invoices within 30 days to ‘become the norm’ in the UK.

More than 1,800 firms are already signed up to the Prompt Payment Code, with each one committing to the fair and equal treatment of suppliers.

In a letter sent to signatories of the code, Margot James MP and Philip King, Chief Executive of the Chartered Institute of Credit Management (CICM) propose that if payment terms stretch beyond 60 days, companies must demonstrate that exceptional circumstances apply.

These will be considered on a case-by-case basis but could include commitments made to pay smaller suppliers faster than larger businesses.

The letter, which argues that paying invoices within a 30 day period should increasingly become “the norm” states: “Prompt payment can make all the difference to small businesses, boosting their cashflow and allowing them to invest in growth for the future.

“Although we have seen some progress, there are still too many business owners across the country who have not been paid on time by their customers.

“We need a culture change to stamp this out and the Prompt Payment Code continues to play an important role in bringing this about, alongside a package of measures taken forward by government and industry.”

The letter also confirms the appointment of a Small Business Commissioner, who will be tasked with curbing poor payment practices.

In addition, there will be a new Statutory Duty to Report, which will be implemented in April next year and requires businesses above a certain size to report on their payment practices.

Data recently released revealed that the UK’s sole traders have had to write off in the region of £8.1billion in late payments over the course of the past 12 months.

Andrew Skinner, a partner and Head of Palmers Debt, Recovery and Insolvency team, said: “Late payment disputes cause cash flow misery for businesses. In some circumstances they can also represent a breach of the original terms of contract. If business owners are concerned about late payment issues they should seek prompt legal advice.

“Often mediation and other alternative dispute resolution (ADR) procedures can be effective in recovering outstanding business debts but as a last resort formal recovery action can also be taken.”

For advice on business disputes including debt recovery, please contact us.