Jump to MenuJump to Main ContentJump to the SidebarJump to About A&T Business AssociatesJump to How A&T Business Associates are DifferentJump to How A&T Business Associates WorkJump to Our LinksJump to our Industry NewsJump to Legal InformationJump to Viewing OptionsJump to SearchJump to Site MapJump to Contact Page

Will new legislation banish SME late payment bother?

The new financial year ushered in new payment practice reporting requirements. Will they be enough to rid SMEs of a £45 billion problem?

The new legislation, which obliges large companies to publicly disclose payment practices, including average invoice payment times, has been welcomed by small business owners, who have long suffered the impact of late payment.

The cost to SMEs of late payment regularly makes the business news headlines. Recent figures from insurance company Zurich put the cost at almost £45 billion, with more than 20% of these firms owed in excess of £25,000 and more than 10% out of pocket to the tune of over £100,000. The effect on cashflow and overall solvency barely needs stating.

And it’s worth remembering that it’s not just the private sector that is guilty of late payment. According to new data from the Asset Based Finance Association (ABFA), many local authorities are failing to pay suppliers within the mandatory 30-day period.

The repeated failure to address the issue, which has such a significant impact on what is meant to be the engine room of economy growth, is nothing short of a scandal. But the new legislation is going to change all this. Or is it?

The calling of a general election puts a potential spanner in the works. While the Labour Party has been quick to pledge support for tackling late payment problems for SMEs, it is difficult to be confident that a political pledge will become an everyday reality.

There is also the matter of the small business commissioner. A somewhat tortuous recruitment process is scheduled to come to an end with an appointment in the autumn, but a change of government puts a question mark against this process.

Given the history of addressing late payment, it is easy to be sceptical, but recent developments do represent a tangible step forward and it is possible to be optimistic about the future. However, there remains a clear need for additional tools for tackling the problem and one of those is invoice finance.

Invoice finance has grown rapidly in popularity, in part because of the need to safeguard cashflow, a point that the ABFA links directly to late payment in its recent study on local authority payment practices. For small business owners to effectively manage late payment, they need all the protection available to them, and this includes invoice finance.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

Return to the News Page