Late payments are a significant problem for UK businesses, but the government is slow to act. A summer press release outlined a “robust package of measures” to help SMEs get paid on time; it addressed the issue in a few ways:
These new powers have drawn criticism from some quarters; a strong critic is the Association of Accounting Technicians (AAT) that has its own set of proposals:
What is the Prompt Payment Code?
The Prompt Payment Code (PPC) is a set of standards for paying suppliers that is administered by the Chartered Institute of Credit Management on behalf of the Department for Business, Energy and Industrial Strategy.
The PPC is effectively a commitment, and any business signing up to the code can display the logo to demonstrate they are serious about good payment practice.
By signing up to the code, companies resolve to pay suppliers within 60 days but work towards 30-day payment terms, and avoid any practice that “adversely affects the supply chain”.
As we’ve seen, the AAT think the code needs strengthening and at the moment it is very much a set of standards rather and rules.
The Impact of Late Payments
Late payments are a significant burden on business; we’re often contacted by a broker to look at a situation where a company has working capital issues due to late payments.
Small companies are particularly vulnerable because they often don’t have cash reserves to fall back on, or a diversified client portfolio to mitigate one bad payer.
When late payments are unexpected, it can be ruinous for small companies; a business owner often doesn’t have a line of credit in place, so needs working capital fast. As small companies often don’t have strong record-keeping, it can take a long time to collect the data required by lenders.
Larger companies aren’t immune to working capital challenges. The Lloyds Bank Working Capital Index reported some figures that show how widespread the problem of late payment is. The report that focused on mid and large companies shows:
Although larger companies are less likely to fail due to one or two large delayed payments, the report shows how endemic late payments are in the UK.
How Reparo Finance Can Help
One of our key strengths is speed; we move very quickly to help brokers and their clients access funding in extremely tight timeframes. We can complete deals in a matter of days, and our whole operation is set up for fast and efficient deal processing. Here is how we do it:
If you are looking to help a client access finance between £50,000 and £1m, then please get in touch on 0161 451 5710 or firstname.lastname@example.org .