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The government’s consultation on how to tackle the thorny issue of late payments closes tomorrow, and there are already calls for a tougher stance to be taken.
The issue impacts both the channel and its customers, with late payments affecting cash flow and undermining the ability to invest.
The government has been running an open consultation on making amendments to the Payment Practices and Performance Regulations 2017.
The main aim of the consultation is to get a sense of the desire to see the existing regulations extended beyond the proposed expiry date of 6 April 2024.
In the foreword to the consultation document, Kevin Hollinrake MP, minister for enterprise, markets and small business, stated that the government’s aim was to stand behind businesses and make payments more transparent.
“As a critical part of our support, government has been proactive in attempting to stamp out the worst kind of poor payment practices within the business community. The Payment Practices Reporting duty aims to increase transparency in payment behaviour to drive improvements in payment practices,” he said.
“It also aims to assist suppliers by providing access to the information they need to make informed decisions about which businesses they trade with, negotiate fairer terms, and challenge large business customers to improve their payment practices,” he added.
Some of those invested in the issue have demanded that, as a minimum, the late payment regulations are extended beyond next year.
“As the open consultation on late payments comes to an end, the end result cannot be half-measures. The regulations must be extended beyond the current expiry date, but this is also a great opportunity to ensure they are effectively combatting late payments,” said Anthony Venus, co-founder and CEO of Quadient AR by YayPay.
He added that even if the government chose not to impose fines on those guilty of late payments, there were still other ways it could bring pressure to bear to ease the issue.
“First, UK law already supports overdue fees of Bank of England base rates plus 8%. Legislating for their inclusion in all contracts would lay out organisations’ obligations and encourage businesses to meet them. Second, the government must make the currently voluntary Prompt Payment Code a central part of expected business ethics,” he said.
His suggestion was to make it possible for those that meet the Prompt Payment Code to bid for government contracts, making it a clear incentive to pay on time.
There is also a role for technology to play in smoothing processes, and Venus said there should be greater adoption of automation tools, with their take-up encouraged by the government.
“Tax incentives to encourage adoption will give small businesses many more tools at their disposal,” he added. “The government needs to apply the carrot and the stick to both sides of the argument. But if it can’t adopt bold proposals, the small and medium businesses that are crucial to our economy will keep suffering.”