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Say the bells of Old Bailey. As old as the nursery rhyme, the number one problem for small business remains the same as it’s always been. Late payment.
It’s a subject we’ve touched on before. It’s a subject we’ll touch on again. It just won’t go away. Getting paid on time.
Research by the online invoice management company Tungsten Network, covered recently in the Independent newspaper, came to the not too surprising conclusion that UK small business is still suffering at the hands of big corporations. Make that suffering at the tight fists of big corporations.
A cursory search of the BBC news web pages reveals over a decade of stories, all with the same theme.
Springfords can’t force your creditors to pay up, but we can offer plenty of good advice to make sure you are in the best possible position before you enter into an agreement with them and to ensure you have a credit control system in place to chase for non payment. Whether contracted or casual, ongoing or unique, you can keep the upper hand if you prepare yourself in advance.
Back in 2004, and probably before that, there were calls to publicly ‘name and shame’ offending late payers. Not much has happened, except the common parlance has changed to ‘outing’, and there still isn’t any legal obligation to post offending names on the stocks.
“The UK has a long standing culture of late payment that is damaging to business, employment and our reputation,” complained Phil Cotter of Experian. He’s probably hoarse by now. That was a quote from 2004, when the average time to settle was 58.4 days, according to his company.
How things have changed since all those reporters died off waiting for their fees to be settled. Actually, not really. The problem is as bad as ever.
Tungsten Network says there’s still an alarming level of late payment. Over one in ten small businesses are waiting more than 90 days to get their bills settled. Along with shopkeeping and soap operas, it’s become so much a part of British folklore that the question was raised in the European Council of Ministers as far back as 2010. Like the problem itself, it only took two years after an overwhelming vote to legislate on the question of late settlement, that something was done.
That something was a Directive, which, in EU terms, is something of a stern suggestion with bells on. The outcome has been the eventual introduction of the Prompt Payment Code which, in the UK, is administered jointly by the Department for Business Innovation and Skills, and the Chartered Institute of Credit Management.
Cynics may say that the Code is a membership body, run by not one but two quangos, and it is not unlike a club for would-be angels, where application is restricted to heavenly creatures with wings. In other words, only the already virtuous need apply (www.promptpaymentcode.org.uk).
However, as an example of good practice, the code does encourage signatories to make their terms and practices less ‘grossly unfair’ to suppliers and to settle within 60 days - just under a day and a half longer than the average ‘late payment’ in 2004. Well, at least it’s an achievable target.
Optimists will point out that anything that encourages best practice is to be applauded, and we’d agree with that - not that sixty days settlement represents best practice in the eyes of most