Online news: BIS joins industry bodies to fight late payment 6 February 2012

The government has announced an investigation into late payments between businesses as part of a campaign to tackle the issue.

Business minister Mark Prisk today announced a working group of business representatives would examine issues behind late payment, as the government tries to tackle the issue of prompt payment for small and medium-sized enterprises (SMEs).

It follows a recent poll of UK businesses published by commercial credit reference agency Graydon, in which 51% of respondents felt late payment had become worse during the past year, with 45% believing it could threaten business investments and 20% that it could even threaten their ability to continue trading in 2012.

In response, the Department of Business, Innovation and Skills (BIS) has teamed up with the Institute of Credit Management (ICM) as part of a drive to prevent more SMEs becoming insolvent through late payment problems.

Among the measures recommended, small businesses are being urged to proactively agree payment terms before delivering orders.

Businesses are also being urged to sign up to the government’s Prompt Payment Code, run by the ICM, and raise complaints over late payment from Code signatories and use legislation already in place to help companies pursue late payers.

The Forum of Private Business (FPB) has also signed up to the drive, and has teamed up with Graydon to further research small firms’ attitudes to managing invoice payments and cash flow.

Philip King, chief executive of the ICM, said: “The only good client is a paying client, and the difficulties of getting paid – and getting paid on time – is a challenge that we all face, regardless of the industry or sectors we serve.

“There is plenty of help out there, but what is essential is ensuring that small businesses, in particular, are aware that they are not alone, and that best advice is only a phone call or a mouse-click away.”

Phil Orford, chief executive of FPB, added: “We take this subject very seriously and the Forum of Private Business has issued a call to action on late payment issues.

“It is important that we put these matters front and centre and ensure small and medium sized enterprises understand what measures they can take to prevent late payment issues arising, and dealing with them when they do.”