Small business unhappy with new government proposals to tackle late payments.
In June, after almost nine months of consultation and consideration, the Government announced a range of proposals to tackle the United Kingdoms late payment culture.
The late payment culture inhibits growth, kills off new businesses before they have a chance to grow as the cash flow chokes th life out of them and costs billions in direct costs and opportunity costs.
The proposals were criticised on this site and by a host of organisations including the National Federation of Builders and the Association of Accounting Technicians (AAT).
The outgoing Chancellor of the Exchequer, Philip Hammond MP, met with the CBI and FSB to try and paint the proposals in a more positive light.
Following this meeting, Philip Hammond MP said, “We have already taken steps to wipe out the UK’s late payment culture. Businesses leaders were clear today that more can be done to end this blight – including through the use of innovative payment platforms.”
Small Business Minister Kelly Tolhurst MP added, “We recently announced ambitious new measures to ensure small businesses get paid on time. This includes holding company boards accountable for payment practices and proposing new powers for the Small Business Commissioner.”
Small Business not impressed.
However, small business owners remain less than impressed and have provided withering criticism of the measures.
Peter Humphrey of Kesblade Ltd, a small property firm based in Rochester, the small business minister’s constituency said, “The latest Government announcement on late payments was extremely disappointing. Moving the Prompt Payment Code to the Small Business Commissioner is like shuffling the chairs on the titanic, it doesn’t change anything other than the owner. Likewise, a technology fund that amounts to around 17p for each British business is utterly pathetic.
“Big business should be forced to sign the Prompt Payment Code and pay their suppliers in a maximum of 30 days like AAT has repeatedly recommended. It’s not rocket science, but the Government just doesn’t seem to get it.”
Small business owner, Caroline Danks, owner of LarkOwl a small fundraising business in Devon said, “The Government doesn’t seem to understand small business.
“A tiny technology fund, moving responsibility for the Prompt Payment Code and adding more bureaucracy onto company boards will do nothing at all to end the multi-billion-pound problem of late payments. As the AAT campaign has shown, there is a lot of business and political support for a simple solution compel large organisations to sign a beefed up Prompt Payment Code that requires everyone to pay at least 95% of their invoices within 30 days, not 60, with fines for those who consistently fail to comply.
“It’s very disappointing that the Federation of Small Business has welcomed the Government measures but we must remember that most small businesses do not belong to the FSB.”
AAT
Phil Hall, AAT Head of Public Affairs & Public Policy said, “Small businesses appear to be less than impressed with Government action in this area. Let’s not forget that 73% of MPs back all three AAT recommendations to solve this problem and that the construction, finance, fashion and recruitment “industries have united around our proposals for big companies to sign the Prompt Payment Code, pay businesses within 30 days and face substantial fines if they persistently fail to do so. Government needs to urgently go back to the drawing board, look at the broad consensus for meaningful change and think again.”
NFB
The National Federation of Builders are hopeful the new PM and his new cabinet can do better.
Richard Beresford, chief executive of the NFB, said: “It’s always exciting to find out who is taking our industry forward and we wish Boris Johnson and his new team the best of luck in making late payment a thing of the past, procurement a more level playing field and the skills crisis an opportunity for learners and businesses. Some of the groundwork has been laid, we now need the Government to be brave enough to implement desperately needed change.”
BESA
Building Engineering Services Association (BESA) however welcome the beefing up of the Prompt Payment Initiative which requires – from 1st September – any organisation that bids for a central government contract worth over £5 million a year, to demonstrate it has effective payment systems in place to ensure a reliable supply chain.
The prompt payment initiative sets a standard that 95% of all supply chain invoices be paid within 60 days for organisations who want to do business with the government. Suppliers who do not comply with this standard could be prevented from winning government contracts.
BESA has urged businesses bidding for public sector procurement to ensure their organisation is publishing payment reports where required and to read latest piece of guidance to understand how government departments will be implementing the changes from 1 September and what is expected of them.
BESA CEO David Frise said: “This is a very important step towards tackling late payment and retention abuse in the industry. For progress towards responsible payment practices to be made across the whole economy, the public sector must lead the way by example.
“The UK lags behind other countries that enacted legislation cracking down on retention abuse like Germany, France, Australia, Canada and New Zealand.
“BESA strongly backs the Aldous Bill to establish a retention deposit scheme and has played a crucial role in building a coalition of supporters for this important reform to deliver payment certainty for our members.
“BESA understands that maintaining the status quo is unacceptable and that retention reform is essential for small and medium businesses. This campaign still has a long way to go but it’s important that we acknowledge the positive efforts currently being rolled out in the public sector.”
What CPA says about the Prompt Payment Code
In a previous blog we wrote about the new government proposals to tackle late payments and bolster the Prompt Payment code.
You can see the Governments full document here : Creating a responsible payment culture: a call for evidence in tackling late payment: government response
We then wrote further about the flaws in the governments proposals here
We need to move to an environment where companies look to pay suppliers as quickly as possible. 30 day terms provide plenty of time to process, authorise and arrange payment. Too many companies don’t even start that process until the invoice becomes due, or indeed is already late.
On the due date, the money should be cleared in their suppliers account.
When the goods or services were ordered, delivery was expected on time. Why should the payment not be treated with as much conscientiousness.
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.
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.
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 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
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.
See the section below – About CPA.
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 you 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.
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
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
Keep up to date with the latest news by following us on social media:-
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Read our blog – What is credit management?
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see our blog – 15 steps to avoid invoice fraud
Read our blog – Communicating with your debtor
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections