The New Government Tackles Late Payment
The Conservatives, as a key plank of their manifesto, announced that they wished to introduce a small business conciliation service to reduce late payment problems. This service will help to settle disputes between small and large businesses reducing the need for litigation, which can be extremely expensive, as well as helping to maintain good customer/supplier relationships.
Sajid Javed, the new Business Secretary, has stated: “There’s a situation familiar to small business owners up and down the country. A letter turns up from a larger customer changing payment terms, or charging them to remain a supplier and in some cases even deducting that charge on the spot against payment owed. This pattern of behaviour is an outrage. It’s bullying – pure and simple.”
Late payment is and has always been an issue but it appears to be on the increase with a number of high profile cases of large corporations abusing smaller suppliers through delayed payment of invoices or including onerous terms in their contracts. Late payments could exceed £40bn this year impacting British businesses, especially SMEs which tend to have less clout with larger organisations.
John Allen, National Chairman of the Federation of Small Business, stated: “we look forward to seeing the details of the proposed Small Business Conciliation Service and how it will address issues like late payments. Small businesses often have the law on their side, but find accessing the legal system complex, time consuming and expensive. A properly constituted conciliation service should help with this and go some way to addressing major problems like the UK’s poor payment culture.”
SMEs have always had issues with chasing payment and the measures announced in the Queens Speech will help to address some of these concerns, however, it is invaluable that SMEs have the right tools for chasing payment from day one such as the Hub of the Cash Flow Professionals. The Hub puts SMEs firmly in control of their debtor book and helps to educate their customers before the need arises to resort to a conciliation service or worse, litigation.
Article contributed by Stephen Chater of Cash Flow Professionals
For more information on the Hub, and how it can help your business please:
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