Late payment needs to be made a priority to the new government
It has often been reported on that late payments are the main issue for most small businesses, figures show that around 50,000 business failures in 2014 could have been avoided if all payments due were paid within 30 days.
The majority of companies respect their suppliers and pay the invoices due in the agreed timeframe. This does vary and can be anything from 30 – 45 days. Late payment becomes an issue for a small business if these days are exceeded, or if their main client is one of the ones that persistently pays late.
A late payment to a small company has a detrimental ripple effect. The company will struggle to pay their own employees and suppliers on time, this then passes the issue down the line to individuals and smaller companies.
This issue can have a snowball effect, instead of spending time on winning new clients and gaining new contracts companies are consumed with chasing payment for work already completed.
The government can play a key role in getting this issue resolved, late payment should be seen as a key priority.
The Small Business Commissioner was established a couple of years ago, and some progress has been made, But the government itself recognises that more can be done and has proposed giving further powers to the Commissioner.
What more can be done:
- Implementing the process where a board member looks at supply chain policies to make sure they are fair.
- Enforce the process where the commissioner can produce late payment plans and impose penalties and interest charges.
- The government itself can ensure that both in central and local government they pay small businesses that provide to them within the agreed 30 days.
All these measures together will create a culture in which late payments are seen as economically and socially irresponsible, and will help to make sure that all companies are paid on time.
If you are have trouble with late payments have a look at our free factsheet on how to implement changes that work for you NOW.
