A GROUP of business organisations have joined together to urge the Government to tackle the growing problem of late payment – in order to help small firms survive, grow and drive economic recovery.
The industry bodies, including those representing UK-based suppliers, have written to Business Minister Mark Prisk demanding a plan of action to address late payment, which hits small firms’ cash flow.
The group, which is supporting the Government’s new ‘Finance Fitness’ campaign, believes any plan to encourage better payment practices should ensure the EU Late Payment Directive – making 30-day payment terms mandatory in the absence of any specified or agreed payment terms – is brought forward to 2012 as originally stated.
The group, led by the Forum of Private Business, also calls for a clampdown on large companies taking “prompt payment discounts” and imposing retrospective changes to payment terms and conditions that are not contractually agreed.
The measures should also pledge to continue with the UK’s public sector 10-day and five-day payment initiatives and ensure they are embraced by more local public sector bodies across the country and that prompt public sector payment is passed on down the supply chain.
The group is calling for a strengthening of the Prompt Payment Code, including requesting businesses to sign up to the Code and wants the Government to consider ways of making it an “opt out” rather than an “opt in” arrangement.
It also wants rules to require FTSE companies to report more detailed information on their payment times.
A spokesman for the Forum of Private Business said: “Under the principle of more open data, we should work towards a culture of more transparency and standardisation of financial information for firms and financial organisations, including credit rating agencies, in order to help small businesses better establish their creditworthiness and properly assess the payment credentials of companies with which they consider trading.”
A survey by credit reference agency Graydon UK shows that 76% of respondents believe the Government is not doing enough to protect UK businesses from late payment.
This is despite 51% reporting that the problem has become worse during the past year, 45% that it could threaten their ability to invest in their businesses and 20% that it could stop them trading.