In a new attempt to combat bad payment practices across the UK, late payment directors could be appointed to enforce good payment behaviour upon large firms. This move could restore some agency back to the suppliers, giving them access to an executive power who will address any issues with unsettled bills or disputed payment. After Carillion and the years of late payment prior, this shake-up could make all the difference.
The government has introduced a multitude of late payment initiatives in the past few years, some successful and some not so successful. Either way; late payment has remained. Delayed payment can be devastating for small businesses, racking up debt that has forced business owners into financial distress or even insolvency.
The issue has been estimated to affect 50,000 businesses every year, with attempts to change practices so far proving ineffective.
The brunt of the issue has always been the government’s reluctance to get tough. When Carillion collapsed back in January it left many suppliers in dire financial straits, while the construction giant faced few consequences. A case in point is the government’s Prompt Payment Code. The code dictated that contractual terms be adhered to while Carillion, one of its own signatories, saw no consequences when these were breached.
This new intervention by a late payment director could impose the necessary hard-line to dissolve late payment once and for all. The Federation of Small Businesses has previously demanded a tougher approach from government in regards to late payment. This new appointment has been positively received by FSB national chairman, Mike Cherry, calling it “a really positive example to set”.