Invoice past due for payment part 2

Since our previous blog post on this topic, there has been encouraging progress from the Government in tackling the late payment crisis that significantly impacts smaller UK SMEs in particular.

The most recent Small Business Strategy survey conducted by the Business and Trade Committee did call on the Government to implement tougher penalties for those who habitually pay late. It appears that, maybe, someone took notice.

The Commercial Payments Bill includes, among other things, several new legislative measures and enforcement strategies:

• 60-Day Cap: Payment terms between businesses are restricted to a hard maximum of 60 days.
  
  
• 30-Day Dispute Window: Invoices must be formally disputed within 30 days; otherwise, full payment and interest apply.
  
  
• Financial Penalties: The Small Business Commissioner can issue heavy financial penalties to companies that persistently settle a high percentage (such as 25% or more) of supplier invoices late.

It is yet to be determined how much of this bill will remain unchanged, but it does begin to tackle the frequently ignored negative impacts and pressures faced by SMEs. These pressures can result in staff reductions, a slowdown in growth initiatives, and ultimately threaten job security.

Considering that late payments are eroding the trust of small businesses and hindering their growth, it is not surprising that the Government has begun laying the groundwork for modifications to the payments framework. However, this consultation was initiated last year, and while SMEs are keen for progress, we are still waiting for policies that will offer the certainty necessary for businesses to invest in their workforce, products, and services.

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