The Small Business Economic Forum have signed an agreement to work together with the Government to tackle late payments.
Members of the SBEF have signed the Prompt Payment Code, committing them to making payments on time.
Business and Enterprise Minister and Chair of the SBEF, Mark Prisk, stated that it was a step forward, but further work is needed to ensure payments reach suppliers on time.
He said: “Large firms have a responsibility to ensure their suppliers are paid on time. These payments are vital to businesses in the supply chain which rely on contracts with larger firms to thrive and need confidence that they can plan for the future without worrying that payments will be late.”
The statement encourages SBEF members to agree payment terms before delivering orders; raise complaints over late payment from Prompt Payment Code signatories; use electronic invoicing where possible and follow the recent ‘Get Paid’ guide for small business.
Philip King, Chief Executive of the Institute of Credit Management said: “Collaboration across businesses and with the support of Government is critical to tackling the vital importance of prompt payment, which is why we have been proud to host and administer the Government’s Prompt Payment Code.
“Prompt payment and treating suppliers fairly needs to become part of our business culture, and the benefits of therefore becoming a ‘preferred customer’ more clearly communicated and understood.
“Our advice, and the message in our Managing Cashflow Guides published with BIS, is that suppliers should not be bullied into accepting unfavourable terms from their customers, and that they should negotiate payment as part of the bigger trading relationship.”
Phil Orford, Chief Executive of the Forum of Private Business said: “Late payment forces businesses to close, plain and simple. Ensuring small firms are paid on time and in full is key to their future growth and prosperity, and also to the UK’s economic prospects.
“We need more large companies at the top of the supply chain to commit to the principle of prompt payment, to understand that squeezing their suppliers out of business ultimately means less choice for customers, but small business owners also have a responsibility to address late payment by implementing cash flow management as a standard business processes.
“We are providing the advice, guidance and support entrepreneurs need, backing this statement and supporting the Government’s drive to help smaller firms know their rights and understand there are measures they can embrace to minimise the problem of late payment, while also working with large firms to encourage a culture of prompt payment.”
The Association of Chartered Certified Accountants is a signatory of the Code, and senior economic analyst, Manos Schizas, said: “This is a timely reminder that prompt payment is vital for ensuring the survival of small and medium sized businesses. Some late payment is inevitable in hard times, but most cases can be avoided without pushing customers over the edge by following good practice.
“We congratulate the Small Business Economic Forum for driving this agenda and are proud to be able to help them with our own guidance.”
Image by Wiertz Sébastien