Late payment getting later

A survey suggests that for a third of businesses, clients have extended their payment terms over the past year. But small business minister Mark Prisk wants to change that.

by Emma Haslett
Last Updated: 09 Mar 2012
For as long as there has been payment, there has been late payment – but according to new research, big business isn’t helping to improve things. Findings by Bibby Financial Services suggest that while a third of businesses have had to put up with clients extending their payment terms over the past year, just under half of business owners said they’ve had no choice but to accept larger customers paying late because they were worried they’d lose ‘valuable contracts’. No wonder small business minister Mark Prisk is worried…

It’s not just big business that’s to blame, though: almost 10% of businesses said they’ve had such a bad experience with late payment, they’ve actually taken their cases to the small claims courts, while 5% added that they’ve had to write off debts because chasing them was costing too much – in both money and time. Speaking of which, 14% said they use the equivalent of a working week each month chasing up payments, while more than half of business owners say they have to do it themselves.

None of this comes as much of a surprise – after all, it was only a couple of weeks ago that Prisk admitted (Labour) government efforts to reduce late payments ‘hasn’t really worked. There’s still a significant problem’. The MP told the Telegraph that ‘it comes down to the relationship between a small supplier and a larger customer – are you really going to use legislation in those circumstances? It’s unlikely’. That said, over 1,000 big businesses have now signed up to the Government’s Prompt Payment Code – so it’s not a total disaster.

Nevertheless: Prisk is now keen to work out what else the Government can to do help small businesses with their cashflow. Yesterday, he hosted a workshop with bodies including the Forum of Private Business and the Association of Certified Chartered Accountants (sounds like a party) to discuss what can be done.

Prisk is clearly a man on a mission: ‘It’s vital that all business sectors understand the importance that prompt payment has in the cashflow management business,’ he said. ‘I am determined to help businesses change the culture of late payment by encouraging them to make sure they are paying invoices correctly and on time.’ Who can argue with that? Unfortunately, politicians have been expressing similar sentiments since Adam was a lad, and not much has changed…

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