Government begins late payments ‘war’

Invoice finance solutions such as invoice discounting and factoring can be used to help release cash tied up in unpaid invoices quickly and simply

The government is ‘going to war’ on late-paying large companies, Business and Enterprise Minister Michael Fallon has stated in an interview with the Sunday Telegraph.

Having heard horror stories of some small businesses having to wait half a year to be paid, Mr Fallon indicted that large companies must either sign up to the Prompt Payment Code or face being named and shamed to the public.

More than £36 billion is currently owed to small firms, which equates to approximately £30,000 per small business.

New research by the Institute of Credit Management has also revealed that small suppliers are now waiting on average 41 days longer for payment than stipulated in the contract.

Phil Orford, Chief Executive of the Forum of Private Business (FPB), said: “Unfortunately, it’s [late payment] not an uncommon practice, seen in all sectors [and] from what our members tell us the situation is getting worse.”

Gary Foster, Corporate Manager for SBF, indicated that something needed to be done to protect small businesses: “Small businesses are becoming more and more reluctant to enter into contracts with the largest businesses due to the likelihood of late payments, which can severely impact on their cashflow.”

“We’d like to see small businesses once again getting excited about securing contracts with FTSE 350 companies, not fearing them,” he concluded.