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 26th
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:
Give clear guidance to suppliers
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.
No comments:
Post a Comment