Late payments is a headache that impacts SME sized channel players who end up having to waste time chasing invoices to keep the money flowing.
According to the Association of Accounting Technicians (AAT) 23% of insolvencies can trace their cause directly back to late payments and despite numerous pledges by various governments it has remained a bug bear in business for years.
the AAT has been proposing a halving of payment days from 60 to 30, the Prompt payment Code being made compulsory for firms with more than 250 staff and there should be penalties, enforced by the Small Business Commissioner.
The latest move will be made by Labour peer Lord Mendelsohn, who is building on AAT proposals and is introducing a Private Members Bill to the House of Lords.
The Bill aims to introduce a statutory 30-day limit for payment of all invoices. The Small Business Commissioner will be given powers to impose large fines on the worst offenders.
“Late payment is crippling small businesses while the UK economy is crying out for investment. By failing to tackle late payment we are starving our small businesses of the capacity to act," said Lord Mendelsohn.
"The recent huge escalation in outstanding payments shows that decades of promoting ‘culture change’ has only made things worse. This Bill will tackle the issue once and for all with a package of measures that is operable, impactful and measurable," he added.
Phil Hall, AAT head of public affairs & public policy, said that it had been campaigning for a long time for changes and the current system was not helping small businesses.
“Despite lots of noise from Government, they have only provided more bureaucracy, tinkering and an emphasis on voluntary measures. There is no reason why any business should be paying its suppliers in more than 30 days and the Small Business Commissioner must have powers to impose fines on persistent late payers," he said.
The AAT is not alone in highlighting late payments as a problem and the Federation of Small Businesses has been running a long standing campaign to end the scourge of late payments and called on numerous politicians to try and fix the problem.
“Small businesses are sick and tired of being left out of pocket by some unscrupulous big businesses taking advantage of this imbalance in power to improve their own balance sheets or mask their own financial failings. Nobody should want to see small business owners turning to personal credit cards or overdrafts because of late payments, or even worse for a business to go under as a result of not getting paid," he said.