Late payment intervention needs to be quick and effective
Government action to help small businesses to get paid on time must be quick and effective, say chartered accountants and business advisers Waltons Clark Whitehill.
Despite an existing government-backed scheme, the Prompt Payment Code, aimed at supporting small suppliers get paid on time, YouGov research has shown 85% of small firms had experienced late payment in the last two years.
Additionally, the BBC has reported that electronic transfer firm BACs has suggested a collective £30.2bn is owed to small and medium sized firms.
In response, Prime Minister David Cameron has announced a consultation into the problem.
Heather O’Driscoll, Managing Partner of Tees Valley based Waltons Clark Whitehill said: “We have already seen criticism of the Prompt Payment Code and the reality of this problem for many small businesses is insolvency. The further you get down a supply chain, the smaller many businesses are and they are simply unable to continue operating with large amounts of money owed to them.
“In recent years, payment schedules have become increasingly stretched, with 30 day agreements being stretched to 60 days, or even 90 days, and in some cases this is being drawn out to 120 days. A four month wait to be paid for work will cripple many businesses. “If the Government is going to have a consultation, it needs to be quick, and the results need to be effective, because the longer this problem goes on, the more businesses will fall victim to it.”
This was posted in Bdaily's Members' News section by Waltons .