Small businesses do not see the UK government’s measures to curb late payments as effective as there is still no concrete action to hold big companies accountable to paying them on time.
The UK government has recently given new powers to the Small Business Commissioner to deter late payments through fines and binding payment plans. It has also made company boards accountable for supply chain payment practices for the first time, and created a fund to encourage businesses to use technology to simplify invoicing, payment and credit management.
But the sticking point is that big businesses, which are usually the culprits for paying smaller companies late, are still not forced to sign up to the Prompt Payment Code.
Which means these new measures were criticised by small businesses and organisations such as the National Federation of Builders and the Association of Accounting Technicians (AAT).
Phil Hall, AAT Head of Public Affairs & Public Policy told Accountancy Age that small businesses appear to be less than impressed with government action in this area. And that the construction, finance, fashion and recruitment industries agree with AAT’s proposals for big companies to sign the Prompt Payment Code, pay businesses within 30 days and face substantial fines if they persistently fail to do so.
Caroline Danks, owner of LarkOwl, a small fundraising business in Devon, said: “The government doesn’t seem to understand small business. A tiny technology fund, moving responsibility for the Prompt Payment Code and adding more bureaucracy onto company boards will do nothing at all to end the multi-billion pound problem of late payments.”
She told London Loves Business: “As the AAT campaign has shown, there is a lot of business and political support for a simple solution (that) compels large organisations to sign a beefed up Prompt Payment Code that requires everyone to pay at least 95% of their invoices within 30 days, not 60, with fines for those who consistently fail to comply.”
The Prompt Payment Code currently encourages its signatory companies to pay 95% of their invoices within 60 days, while most businesses would prefer it to be reduced to 30 days.
Peter Humphrey of Kesblade, a small property firm based in Rochester, told The Journal For Asset Finance that: “The latest Government announcement on late payments was extremely disappointing. Moving the Prompt Payment Code to the Small Business Commissioner is like shuffling the chairs on the Titanic, it doesn’t change anything other than the owner. Likewise, a technology fund that amounts to around 17p for each British business is utterly pathetic.
“Big business should be forced to sign the Prompt Payment Code and pay their suppliers in a maximum of 30 days. It’s not rocket science but the government just doesn’t seem to get it.”