Late payment is no longer acceptable to contractor accountants

Accountants may be interested to learn that some industry bodies have united to urge the government to do something about the late payment problem that has been blighting small businesses since the start of the recession.

The FPB, Graydon and Lloyds TSB are among those who have sent a letter to Mark Prisk asking him to devise a plan of action.

The group wants to see the EU Late Payment Directive brought forward to next year. That would make it mandatory for companies to settle invoices within 30 days. Furthermore, they have called for the coalition to ensure that suppliers cannot be forced to change their payment terms if they do not want to do so.

Other ideas include stopping large organisations taking discounts for prompt payment and imposing new terms and conditions after a contract has been signed.

Graydon recently conducted research that found 76% of UK business owners do not think the government does enough to protect firms from late payers. BACs also published findings that showed SMEs are owed £3.6 billion from overdue invoices. The problem is so bad that some small businesses are defaulting on their obligations to government departments such as HMRC.

Phil Orford, the chief executive of the FPB, said companies are increasing the pressure on the government to tackle the growing problem of corporate late payment. Small businesses are already suffering badly from this culture and there is a danger that it could become endemic.

Firms can be forced out of business by late payments and retrospective alterations to payment terms. The problem needs to be stamped out now so that companies realise prompt payment is the only acceptable way to do business, he added.

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