Late payments rules strengthened – business news 19 January 2021.
James Salmon, Operations Director.
We cover the Government announcement of a strengthening of the rules on late payments, plus lots more business news we thought would interest our members and readers.
Here are CPA we want to share the business news stories we have seen that we think will affect our members and readers. Many of us are busy fighting to protect our businesses and therefore might have missed some of the news that could impact small businesses, their owners and those that sell on credit.
Government strengthens rules on late payments
The Government has announced it is to strengthen the Prompt Payment Code, tightening the rules on late payments and ensuring larger companies pay their suppliers on time.
The required payment period to small businesses is to be slashed in half from 60 to 30 days, with commitments to be made personally by CEOs or Finance Directors.
Tougher rules come as government looks to increase powers of the Small Business Commissioner to protect jobs and growth as we build back better from the pandemic.
There is to be an overhaul of the Prompt Payment Code (PPC) to crack down on delayed invoices owed to small businesses, announced by the government today (19 January 2021).
Under the new reforms, companies that have signed up to the Prompt Payment Code will be obliged to pay small businesses within 30 days – half the time outlined in the current Code.
Despite almost 3,000 companies signing the Code, poor payment practices are still rife, with many payments delayed well beyond the current 60-day target required for 95% of invoices. Currently, £23.4 billion worth of late invoices are owed to firms across Britain, impacting on businesses’ cash flow and ultimate survival.
To help tackle the problem, businesses owners, Finance Directors or CEOs will be required to take personal responsibility by signing the Code, acknowledging that suppliers can charge interest on late invoices under the Code and that breaches will be investigated. Those signed up to the Code will redouble their efforts to ensure payments are made on time and breaches will continue to be publicised by the government in order to encourage compliance.
The move comes as the government seeks to strengthen the powers of the Small Business Commissioner (SBC) to ensure larger companies pay their smaller partners on time. New powers proposed in a recently closed consultation include legally binding payment orders, launching investigations and levying fines.
Small Business Minister Paul Scully said: ” Our incredible small businesses will be vital to our recovery from the coronavirus pandemic, supporting millions of livelihoods across the UK.
Today, we are relieving some of the pressure on small business owners by introducing significant reforms to the UK payments regime – pushing big businesses to pay their suppliers on time.
By signing up to the Prompt Payment Code and sticking to its rules, large firms can help Britain to build back better, protecting the jobs, innovation and growth which small businesses drive right across the UK.
According to the Federation of Small Businesses (FSB), around 50,000 businesses close every year due to late payments, damaging Britain’s prosperity and threatening jobs.
Small businesses account for two-thirds of UK private sector employment and more than half of business turnover. Late payments impact their bottom line, which can hold back investment or job creation and, in the worst cases, lead to job losses and business closures.
The reforms will help to build a culture of prompt payment between companies and challenge UK businesses to change their practices and stand by small partners at a critical time for the UK’s economic recovery.”
The changes coming into effect immediately are:
- requiring a company’s CEO or Finance Director, or the business owner where it is a small business, to personally sign the Code to ensure responsibility for payment practices is taken at the highest level of an organisation
- introducing a new logo for signatories to use in external communications to show their commitment to the Code, making it more damaging to a company’s reputation to breach it
- acknowledgement as a condition of signing the Code that suppliers can charge interest on late invoices
enabling administrators of the Code to investigate breaches based -party information
In addition, the new requirement for signatories to pay 95% of invoices from small businesses (those with less than 50 employees) within 30 days will be effective from 1 July 2021. The target for larger businesses will remain 95% of invoices within 60 days.
Interim Small Business Commissioner Philip King said: “I am delighted to launch the reformed Prompt Payment Code. In addition to their current public commitment to pay 95% of all payments to their supply chain within 60 days, signatories of the reformed Code have committed to paying 95% of their small business suppliers within 30 days. I commend those signatories who make further individual commitments to go further and settle invoices sooner.
Late payment causes real hardship to small businesses, and the issue is more prevalent than ever due to the continued impact of the pandemic. Code signatories of all sizes demonstrate their commitment to ending the culture of late payment and helping to increase business confidence. I encourage businesses of all sizes to implement ethical business practices and sign up to become a Code signatory and join us on our journey to aid business recovery post COVID-19.
Federation of Small Businesses (FSB) National Chairman, Mike Cherry, said: “A late payment crisis was massively stifling the UK economy before COVID hit. The pandemic has deepened it. FSB has campaigned for good payment practice to become the norm across the UK economy, not least through a toughening of the Prompt Payment Code and the adoption of 30 days as the new maximum payment period.
It’s good to see the progress announced today by BEIS and especially the outgoing Small Business Commissioner that has driven this agenda. It’s now time for swift delivery, and for all existing and future PPC signatories to implement 30 days as the new maximum.
Ending our pernicious poor payment culture for good over the coming months will be fundamental to turning our hopes of economic recovery into reality.
The Confederation of British Industry’s Chief UK Policy Director, Matthew Fell said: “COVID-19 has once again highlighted the importance of maintaining healthy supply chains.
Small companies are the backbone of the economy, but remain the most at risk from a late or unpaid invoice – particularly after months of pressure on cashflow. Businesses have been making good progress to improve payment practices, but more can be done.
Introducing new rules to drive faster payments to smaller businesses will strengthen supply chains, benefiting the firms that need it most, and shortening the road to recovery.
The PPC currently has over 2,800 signatories, who are required to pay 95% of their invoices within 60 days or else be publicly struck off the Code until substantial changes to their payment practices have been made.
When a company is struck off the Code for poor practice, this is publicly announced by the Small Business Commissioner’s Office.
What CPA Says
The Credit Protection Association (CPA) welcomes any measures that help tackle late payment and highlight the issue of the late payment culture as one of the biggest dangers for small businesses .
However, if they want to crack down on slow payment, the tools already exist! They should promote Late Payment Compensation.
They should also look look to increase the rates of compensation which were set almost 20 years ago and have not been adjusted for inflation.
The measures they have announced are great PR but they only affect the 3,000 businesses who have signed up to the code. That’s almost 3000 out of circa 5,000,000 businesses in the UK .
More needs to be done to get the other 4,997,000 businesses in the UK to pay on time!
CPA has been using Late Payment Compensation to pass the cost of late payments on to the the late payers!
By collecting Late payment compensation from former customers we can provide a powerful incentive for businesses to stop paying late as a practice and to end the late payment culture!
If you sold B2B on invoice and were paid late then you could be entitled to compensation from your former customers. CPA is helping businesses calculate and recover that compensation.
Call us today on 0330 053 9263 or go to the section below CPA is passionate about late payment to find out more
PM: Vaccine is the best way out of recession
Boris Johnson has told business leaders that efficient delivery of the coronavirus vaccine offers Britain the best opportunity for an economic recovery in the wake of the pandemic. Chairing the first meeting of a business council designed to coordinate the Government’s economic response to the coronavirus crisis, the Prime Minister told bosses from thirty of the country’s biggest companies that it was important for ministers and businesses to work together to rebuild the economy. He told the executives that his Government will support job creation, upgrade infrastructure and launch a “green industrial revolution” that will help the UK “build back better”. Chancellor Rishi Sunak told the Build Back Better Council effectively distributing the vaccine is currently the most important economic policy, saying the inoculation programme will help to build a platform for a strong economic recovery in the second half of the year.
Applications dip, vacancies increase
New figures show that the number of people applying for jobs in December was the lowest it had been in five years. The analysis by jobs website Broadbean Technology shows that 2.2m job applications were made last month, down 34% on December 2019. With the number of applications dipping despite the unemployment rate being pushed up by the coronavirus crisis, Broadbean says the extension of the government’s furlough scheme may be a factor. The report also highlights that vacancies in the first week of January were up 4% compared to the middle of December. Broadbean Technology managing director Alex Fourlis welcomed the uptick in vacancies and said the progress of the coronavirus vaccine programme and the fact many employers are better able to facilitate remote working means the firm is “quietly confident that the positivity we have seen so far will continue.”
UK workplace sexual harassment rules not enforced say researchers
Campaigners have identified a gap in enforcement of sexual harassment rules, with regulation outside the remit of the Health and Safety Executive (HSE) and the Equality and Human Rights Commission lacking enforcement powers.
House prices slip
Rightmove says average property prices have fallen nearly £3,000 in the last month, with the 0.9% dip coming as sellers looks to attract buyers hoping to snap up a home ahead of the end of the stamp duty holiday on March 31. The report shows that annual growth has slowed to 3.3%, down from the 6.6% year-on-year increase recorded a month ago. The analysis also reveals that while prices have declined slightly, the number of buyers contacting agents between and January 2 and January 12 was up by 12% and sales agreed were up by 9% compared with the same period last year. Rightmove director of property data, Tim Bannister, said the tax savings brought about by the stamp duty cut are an “added incentive” for movers, while also warning that there are still “a huge number” of sales agreed in 2020 that are “stuck in the processing logjam” and awaiting completion.
Ending stamp duty break will see 44k fewer new homes
There will be 44,000 fewer new homes built if the Government does not extend the stamp duty holiday, research suggests. A property slump will take hold after the tax break ends on March 31, according to consultant Capital Economics – forcing housebuilders to scale back their plans and adding to the housing crisis which has locked a generation out of ownership. Capital Economics predicts new build starts will drop from a total of 152,000 in 2019 to 130,000 in both 2021 and 2022. This would be equivalent to 44,000 lost homes over the next two years, helping to thwart the Government’s target for 300,000 properties to be built per year. In 2020, housing starts dropped by 30,000 due to the pandemic.
Markets.
Yesterday markets paused after a busy week, the FTSE 100 closed down 0.22% at 6720.65. The US was closed for Martin Luther King Day.
Sterling is at 1.1240 Euros and 1.3605 US Dollars. Brent Crude is at $55.26 and Gold is at $1837.
Oil Prices fell as a stronger dollar, fears over soaring COVID-19 cases around the world and the slow pace of vaccination against the virus outweighed a better-than-expected quarterly rebound for China’s economy.
Experian
Credit rating agency, Experian reported a 10% rise in revenue as stronger growth in North America and Latin America helped offset weakness in UK and Ireland.
Begbies Traynor buys CVR
The UK’s largest insolvency specialist, Begbies Traynor will pay a consideration of up to £20.8m for insolvency company CVR Global. CVR’s 90 partners and employees will join Begbies’ offices and teams and will operate under the Begbies Traynor and BTG Advisory brands. CVR has offices in England and overseas sites in Gibraltar, Jersey, Cyprus and the British Virgin Islands – with these giving Begbies Traynor its first offshore offices. Begbies executive chairman Ric Traynor said: “The acquisition of CVR is our largest insolvency acquisition to date and is expected to be immediately earnings-enhancing.”
Retail
UK Retail Footfall during the current national lock-down has not fallen to record lows seen in March, latest analysis showed. Footfall across all retail dropped 10.9% last week compared to the previous 7 days – less than half the 27.1% drop recorded the week before.
Treasury minister downplays need for tax rises
Jesse Norman, Financial Secretary to the Treasury, has downplayed the need for immediate tax rises to help balance the nation’s books following the coronavirus crisis. Answering questions from the Commons Treasury Committee, he suggested a swift economic recovery from a recession brought about by the pandemic could see ministers avoid increasing taxes in response to record levels of government borrowing. He was speaking in the wake of press reports over the weekend which suggested Chancellor Rishi Sunak could be set to announce tax increases in his March 3 budget. Mr Norman said it is “not absolutely obvious” that taxes will need to be raised, saying there may be a “somewhat delayed but nevertheless very pronounced bounce” and pointing to “features of the economy which would suggest that could be quite significant”. Mr Norman said Mr Sunak is “looking to build strong, sustainab le public finances over the longer term”, adding this this “seems to me to be a judicious recognition that some taxation could impede growth, could damage our recovery”. Mel Stride, chair of the Treasury Committee, said: “I take away from this that it’s not a done deal that there will be tax rises.” Meanwhile, Mr Norman also revealed that policymakers are “still reflecting on” the possibility of an online sales tax.
Plumbing boss: Unblock the economy with tax increases
Charlie Mullins, boss of Pimlico Plumbers, believes increasing taxes will stimulate the economy. He said: “Individuals making more money should be paying more tax,” adding that too many high-earners are paying “next to nothing” on their profits and called for everyone to pay their “fair amount.” In an interview with Talkradio, the entrepreneur also called for tax loopholes to be closed.
Cost cut could spark sales surge for electric cars
A study by Deloitte shows that 29% of drivers would buy an electric car if it was priced below £20,000, while 13% would do so if prices fell to £10,000 or less. Jamie Hamilton, Deloitte’s head of electric vehicles, said: “Many UK drivers are poised to switch to electric but remain cost conscious.”
Don’t let Covid-19 bust your business!
It will if your cash flow dries up, either sooner or later.
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for sometime to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. Above all tactfully, because maintenance of goodwill is paramount.
To meet the needs of creditors in the current crisis, we have designed a “critical care” package especially tailored for the situation.
- The annual package costs start at very low rates
- A minimum performance warranty is provided
- Several complimentary services included
Clients instruct CPA on-line via their PC or phone, completely user-friendly. Your late paying customers are told to pay you direct (not to us).
A very recent report shows a 23% increase in the number of unpaid invoices since March 11th THIS YEAR – are you getting a build-up of late payers?
Right now, overdue accounts must be a concern and CPA has a great track record of encouraging slow-payers to pay their suppliers quickly.
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
Do you sell on credit?
With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.
Those customers will look for the easiest option to boost their cash-flow. Don’t let it be you.
You can’t just assume your customers can and will pay you eventually, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply on credit, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When your customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
You might be hesitant about contacting a debt collection agency. What are they going to be like?
Can they help your particular type of business?
There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.
Debt collection agencies are not all alike.
Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain
the best possible relationship with customers!
At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.
The Credit Protection Association has helped has assisted tens of thousands of UK businesses with their credit control requirements, since the First World War.
We are polite, firm and efficient when it comes to recovering outstanding debt.
“We have used CPA for a number of years now. The website is easy to navigate around with lots of helpful reports. The staff are always at hand and very friendly. CPA has helped us reduce our debt over the years and keep track of potential issues with our customers.”
~ CPA client in Buckinghamshire
“The service from CPA has proved to be everything that you said it would be. We have already seen a huge benefit. We have had a number of overdue accounts paid promptly and directly to us. It is also a huge weight off our mind to know that once we have passed an overdue payment over to you, you take care of everything whilst keeping us informed.
~ Credit Controller client in Warrington
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs, with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
You put up with the PAIN – now claim the GAIN!
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Did you know that your business is entitled to a minimum of £40 for every commercial invoice paid late to you over the past 6 years?
How many of your invoices are paid late each month – 20, 50, 100 or more?
At £40 per invoice that’s claim of £57,600, £144,000, £288,000 plus interest. The more invoices the bigger the claim!
At £100 per invoice it’s £144,000, £360,000, £720,000 plus interest.
For over 20 years, CPA has calculated and recovered Late Payment Compensation on behalf of Clients!
Yes, CPA can help you boost your business cash-flow.
Don’t let your bankers control you, contact CPA today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Do you realise you could be sitting on a fortune?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you sold B2B on credit then there may be a hidden source of capital you can call on.
If you fancy an extra bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.
We can help you uncover the pile of gold, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could provide the cash boost your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping business owners who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
Those former clients who regularly paid you late can finally be made to pay.
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.