Late payment continues to be a big problem for many small and medium sized businesses, with 85% saying that they have experienced this over the last two years.
The Government has therefore announced that it will be launching a consultation on tackling late payment later this year, in which it will call for views on a range of questions including:
- How we can encourage greater oversight and responsibility for payment policies at senior management and board level?
- What can be done to increase transparency around which companies are good payers and which ones are not?
- How the Prompt Payment Code can be strengthened, and whether there is more that can be done to hold companies to account against it?
- Whether more can be done to enforce existing legislation, including the provisions on payment terms – for instance the prohibition of ‘grossly unfair’ payment terms?
- What can be done to encourage more companies to make use of their existing statutory right to interest for late payments?
- Whether there is a case for further legislation or penalties?
- Whether government can do more to help SMEs to help themselves, including through new technologies and services like electronic invoicing and mobile payments?
A YouGov poll of 1,100 SME decision makers commissioned by Barclays found that:
- 85% had experienced late payment over the last two years.
- Around a fifth (22%) had declined to do future business with a business that has paid late in the past.
- 30% of respondents who had experienced late payments had had to use personal money or assets to boost their cash flow.
- For 11%, late payment had nearly caused their business to fail.
- 66% of respondents who had experienced late payment said that on average they had had to wait more than a month past the agreed payment terms for a bill to be paid, whilst 11% said that they had had to wait more than six months.
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