Despite the Government taking action previously, to improve payment practices amongst businesses throughout the UK, we have once again been reading about the impact late payments are having on SMEs, since returning to the office after Christmas.
The prevalence of poor payment practices pre-pandemic was unacceptable, but the challenges brought about by COVID-19 have done little to transform this state of affairs.
Even less so now, can many businesses afford to be paid late and it is unfortunate that, for some, this particular obstacle will spell the end of the road.
It is also often the case that late payments give rise to late payments; if you don’t get paid on time by your customers, how can you ensure your bills are paid promptly?
Where late payments present a problem for businesses, the pressure on their finances is likely only to worsen as operational costs grow, NI contributions go up, dividend tax increases and the National Living Wage rises.
Reminder of reforms to the Prompt Payment Code (PPC)
In early 2021, the Government announced reforms to the PPC in a bid to tackle amounts outstanding in respect of small business invoices.
This saw around 3,000 business owners, Finance Directors and CEO’s pledge that they would pay invoices within 30 days; a far shorter period than outlined in the standard code.
Signatories also acknowledge that interest is applied to late invoices, breaches of the code could be investigated and that poor practices can lead to them being struck off the code and this fact being made public.
What powers does the Small Business Commissioner (SBC) have?
The role of the SBC is to help businesses collect in money that is owed to them, and to see that complaints and late payment disputes are appropriately dealt with.
The Government are currently analysing feedback to a consultation on extending the powers of the SBC to activate enforcement mechanisms against businesses who do not comply with information requests or whose payment practices are found to put small businesses at a disadvantage.
Cloud accounting and prompt payment
With so many different cloud accounting software packages, apps and online payment platforms at our disposal, getting paid promptly should be easier than ever.
The ease and convenience of online payment gateways can often encourage customers to make a payment sooner, whilst it’s on their mind, which in turn means that you can utilise the money within your business sooner.
Being able to use their credit card, for example, also gives them better control of their own cash flow by deferring the impact of making the payment.
Faster payments for you + flexibility for your client = a match made in cash flow heaven.
Here to help
Here at George Hay we can advise you on improving your credit control processes and making changes within your business that uphold good payment practices.
We support a range of online accounting and bookkeeping software packages meaning we can take care of all your cloud accounting needs.
Contact us today to discuss your requirements in more detail with one of our experts in Bedfordshire, Hertfordshire or Cambridgeshire.