New late payment legislation due to be implemented across the EU in 2013 could be brought forward to 2012 in the UK, as the government coalition looks set to fast track the initiative.
The new regulations would set 30 days as a standard period for both public and private entities to pay invoices. This could be extended to 60 days if suppliers have agreed to give customers time to acknowledge receipt and review the goods or service.
Anything past 60 days could be branded as “grossly unfair” in courts, therefore putting the power in the hands of the suppliers, according to business minister Ed Davey.
If payment terms were exceeded, small companies would have the right to charge 8% interest plus a £35 fee.
This comes after new research has revealed that, on average, British SMEs have to wait 39 days past agreed payment terms before invoices are finally paid.
Late payment is a major concern for SMEs across the board, and so the government’s plans to fast track this initiative could increase working capital available for UK businesses, potentially providing a welcome boost for the economy as a whole.
Are late payments affecting your cashflow?
Here at Skipton Business Finance, we really appreciate the importance of cashflow as the life blood of business.
We are able to provide solutions to late payment via our invoice finance facilities, which could assist your cashflow and get you moving in the right direction.