The devastating effect late payments can have on businesses individually and on the economy as a whole – evidenced daily through stories in the press and by the increasing number of vacant premises appearing across industrial and business parks throughout the country – is seeing the government getting tougher on offenders who don’t pay on time.
The recent ‘Report from the All Party Inquiry into Late Payments in Small and Medium-Sized Enterprises’ contains some startling statistics:
• In 2012 over £36.4bn was owed to over a million SMEs in overdue payments
• The average owed per company was approximately £36,000 at any one time
• Over half SMEs are not paid promptly by large companies – with the average payment time 58 days (almost double normal contract terms)
• In 2012 over 124,000 micro companies and SMEs almost ceased trading due to the effects of payments coming in late
• It’s estimated that late payments caused 4,000 businesses to fail during the 2008 recession
• Overdue payments adversely affect SMEs’ ability to access financial funding
• The economy is suffering as SMEs fail and employees lose work.
The report contains 11 key recommendations, covering provision of advice and support for the SMEs plus proposals for driving change to the late-payment practice itself. It builds on previous initiatives, such as the Department of Business and Innovation Skills’ Prompt Payment Code set up to encourage organisations to pay suppliers on time and the recently updated EU Payments Directive of March 2013 (European Directive 2011/7/EU on Combating Late Payment in Commercial Transactions) with its aim, “reducing the culture of paying late and making paying on time the norm”. 소액결제현금화
According to the inquiry, 42 percent of SMEs believe that late payments are “not seen as an issue by large companies”. As a result, one of the 11 key recommendations is that, “The Government should promote the adoption of ‘good practice’ guidance for large companies in managing supply chains, including publishing performance data relating to payment-on-time to suppliers in audited annual accounts” – a charter to ‘name-and-shame’ as Accounts Payable News reports.
Debbie Abrahams, MP for Oldham East and Saddleworth and convener and chair of the cross-party parliamentary inquiry says, “Until top CEOs, and their executive board members, make a decision to act ethically in business, and treat our small and medium sized businesses fairly, this problem will persist. The public has grown tired of hearing about huge, greed driven, pay packets, pay-offs for failure and tax evasion; but allowing a culture of late payment to persist unchallenged is another board-level decision that directly effects ordinary, hardworking, people across the country.”
To be fair to these ‘top CEOs, and their executive board members’, evidence points in most cases not to a deliberate policy but to poor practice and inefficient and slow manual processing procedures as the root cause of these un-prompt payments – which an invoice management solution can solve.
With automatic document and data capture, high performance invoice matching, and online coding and authorisation, the whole process is streamlined. Instant document retrieval means disputes can be resolved quickly, and alerts set to flag approaching deadlines put an end to late payments.
Plus, for the customer, avoiding late payment also means:
• Eliminating late payment interest and penalty charges