Suppliers advised to claim due compensation for late payments

Latest figures from a commercial debt recovery law firm has revealed the scale of debt UK businesses are dealing with due to late payments. Research also shows that suppliers are bank rolling their customers for an average of 103 days from when the invoice is issued to before they threaten legal action with a Letter Before Action (LBA).

This amount of days shows a 24% increase from 83 days when compared to Q1 in 2014 to Q1in 2015. As a result, many have argued that although high profile campaigns have increased to try and tackle this issue, late payments in the UK are only getting worse.

Although the business industry on the whole improves, it seems that many UK businesses are unwilling to 'rock' any existing client relationships by threatening legal actions. However it is likely that their invoices will simply fall to the bottom of an unpaid pile  and forgotten. Therefore it is essential for businesses to act early on overdue invoices. In order to fight late payers, businesses should claim their right to compensation. The Late Payment Act allows businesses who have been paid late  to claim interest for the period the debt was overdue, plus compensation.

Businesses are entitled to claim interest and compensation remains for 6 years on each and every invoice paid late, unless clear assent is proven against the claimant. Many businesses utilise the Late Payment Act in order to take on late payers, recovering significant sums to compensate them for the administrative and legal costs they have incurred chasing late payment.

If you are a business suffering from poor cash-flow and unpaid invoices Positive Collections can help you. Positive Collections provides a FREE online credit control system to help you streamline and manage your invoices more efficiently. Our debt recovery service is an effective 3 step solution to ensure that you receive any monies owed.

To find out more about how Positive Collections can help you simply visit us online at www.positivecollections.co.uk or call us on 0208 313 7887.

Government set to crackdown on late payments

New rules have been implemented to tackle late payments for public sector suppliers. These new rules for the public sector mean that both contractors and sub-contractors will have to be paid within 30 days. These tougher measures are as a result of late payments being one of the biggest problems for small businesses in the UK.

Late payments have proven to prohibit business growth and often cause many small businesses to close down. In a report from 2014, UK businesses faced up to £40bn in unpaid invoices which equates to an average of £38,186 per firm.

However, under new rules which are being implemented as of the 26^th February 2015, the public sector will have to pay both contractors and sub-contractors within 30 days. In addition to this, the government has also revealed that public bodies will need to publish an annual late payment report. This push comes as the government warns that late payments which cause smaller firms to fall into financial crisis will no longer be tolerated.

The minister for business, enterprise and energy, Matthew Hancock has also suggested that this change is a way of “toughening up the voluntary Prompt Payment Code to make 30 days the standard term, with 60 days the maximum in all but ‘exceptional cases’…giving the body which runs the code ‘teeth’ including the potential to issue fines”.

What is the Prompt Payment Code?

With any business, prompt payment is critical for cash flow, especially for small businesses that fall within a supply chain. As a result, the Prompt Payment Code is a way of encouraging a good practice between both organisations and suppliers. Those who sign the code are committed to paying their suppliers within clearly defined terms and dealing with any issues which arise using the correct process. Therefore those who sign the code are to:

• Pay suppliers on time

• Give clear guidance to suppliers

• Encourage good practice

With this in mind, Mr Hancock is expecting all major companies to sign up to the code. This comes with the intention to help speed up the process in which companies are paid.

If your business has fallen victim to late payers, Positive Collections can help you. Positive Collections provides a fast and affordable solution to recovering any outstanding invoices and debts you may have incurred. In just 3 simple steps and for as little as £4.99, we can help recover your business debts and help improve your cash flow. 

For further information and advice visit us online at www.positivecollections.co.uk or simply call us on 0208 313 7887.