AAT piles on pressure for late payment reform.
31st January 2019.
The Association of Accounting Technicians (AAT) yesterday wrote to the Government Minister responsible for dealing with late payment legislation to highlight the wealth of support that exists for proposed reforms to the Prompt Payment Code and to demand action.
Every year, tens of thousands of British businesses become insolvent due to late payments and many more suffer a loss of income that can stop businesses from investing and growing. It can also take a severe mental toll on small business owners.
To tackle these problems, AAT has long called for three simple reforms to end late payments in the UK. These are that the Prompt Payment Code:
- be made compulsory for companies employing more than 250 employees
- see maximum payment terms halved from 60 to 30 days
- be supported by a clear, simple financial penalty regime for persistent late payers, enforced by the Small Business Commissioner
As well as representing 140,000 Accounting Technicians, AAT has secured the support of the construction, fashion and recruitment industries, as well as 73% of MPs, for its three recommendations. AAT further states that it has “…engaged with the Chartered Institute of Credit Management (CICM) who operate the existing voluntary Prompt Payment Code as well as the Small Business Commissioner and found both to be supportive.”
The letter forcefully concludes
“Given the failure of a wide array of voluntary initiatives and the frankly meaningless payment practices reporting requirements, the majority of businesses, Parliament and society as a whole now back common sense, simple, effective, long overdue reforms that will end the totally unacceptable late payment practices that continue to plague the British economy. The AAT recommendations provide such a solution.”
The Government ran a consultation on the issue between 4 October and 29 November 2018 and says it is currently “analysing feedback” from the 300 consultation responses received.
Earlier this month, the Government Minister responsible for this issue, Kelly Tolhurst MP lauded the Small Business Commissioner for getting £2m of late payments eventually paid to small businesses during his first 12 months in operation. This ignores the fact over £13bn is owed, he has no powers to fine companies and will never make the difference required without reform.
CPA’s view
CPA welcomes anything that highlights the issue of late payment and welcomes any measures that can be introduced to help break the late payment culture.
The AATs proposal would be welcome.
However, late payment legislation already exists that is currently little used. If the culture could be changed and the legislation enforced by suppliers then the late payment culture could be crushed.
IN CPA’s view, the only solution to solving late payment is to make suppliers believe that paying late is not in their interest. This can be achieved through retrospective action
Read our blog here on how this can be achieved.
CPA’s late payment compensation department can help you use the current legislation to fight the late payment culture. Contact us to find out how.
How CPA can help
The Credit Protection Association has been battling late payment for over 100 years. CPA have collected billions on late paid invoices for our members.
At the Credit Protection Association,we provide a suite of credit management services to help you avoid and deal with late payers.
We provide first class credit information that can help you avoid being over extended to customers who are at risk.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports predict approximately 96% of insolvencies long before they arrive.
Our debt recovery services also chase down late payers, resolving over 80% of debts referred, recovering money that our members can then put to work within their own businesses.
Our members have used this boost to their cash flow to fund investment in new projects, additional materials, new staff, extra equipment or new technology.
At the same time, our credit checks and credit reports are utilised by our members to investigate all suppliers and customers. It is important to keep an eye on your key business partners – Suppliers and Customers – to ensure their are on a firm financial footing.
Our reports help avoid bad payers or being over extended to a customer beyond their means.
We come across business owners who have been burnt before working or providing goods on credit because the hassles were not worth it.
Our services have helped them go back in to trading on credit with confidence
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper.
And our new Late Payment Compensation department could unlock hidden potential in your accounting records and uncover the hidden compensation you are owed by past customers that could be used to give your business the cash flow injection it needs.
Give us a call to find out how we can help.
James Salmon, Operations Director, 31st January 2019
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