Business Minister Mark Prisk announced a new working group of business representatives would examine issues behind late payment, while the Association of Chartered Certified Accountants (ACCA) published a new guide on prompt payment.
Prompt payment is vital for small and medium-sized enterprises (SMEs), with many firms not able to survive the cashflow problems that late payments create. Advice and guidance for small businesses to help them make sure they are paid on time and can seek redress if they are not is part of the Finance Fitness campaign, which sees government and businesses working together to help SMEs.
The Government is encouraging SMEs to:
- Proactively agree payment terms before delivering orders.
- Sign-up to the Government’s Prompt Payment Code, run by the Institute for Credit Management (ICM) and representing an estimated 60% of supply chain value in the UK.
- Raise complaints over late payment from Code signatories and use legislation already in place to help companies pursue late payers.
- Use electronic invoicing where possible, automating process and adding instant transfer of the invoice and instant verification from the customer that the invoice has been received.
Get Paid!, a new guide for small businesses which contains tips and advice from both suppliers and customers, has today been published by the Association of Chartered Certified Accountants (ACCA). It contains valuable lessons from small businesses such as advice on invoicing and developing a well-defined credit policy.
Business and Enterprise Minister Mark Prisk said:
“It is hugely important that all businesses, particularly small firms, establish clear payment terms to ensure they get paid on time and successfully manage their cashflow.
“There is practical information available for businesses on getting paid that we are promoting to small firms through our Finance Fitness campaign, and this new guide published by the ACCA contains clear, helpful advice. I want small businesses to use this information and set up appropriate payment terms.
“The Government is already setting a strong example by paying 80 per cent of invoices within five days and the Prompt Payment Code is encouraging best practice. What’s more, we have secured the agreement of business representative bodies to come together and establish a prompt payment workshop, to explore these issues more fully and develop business-led solutions. We must continue to promote prompt payment to ensure our small businesses can thrive and grow.”
Small firms can get more advice and information on securing prompt payment at BusinessLink.gov.uk and from the Cash Management guides developed by the Institute of Credit Management, in association with BIS.
Phil Orford, Chief Executive of Forum of Private Business, said:
“I’m pleased to see getting paid on time being given the attention it merits as a vital aspect of small businesses’ cash flow management.
“We take this subject very seriously and the Forum of Private Business has issued a call to action on late payment issues - indeed, we offer our own Credit Control guide and debt management guidance - and 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.”
Philip King, Chief Executive of the Institute of Credit Management, 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 - not least through our own Managing Cashflow Guides that we published with BIS and continue to revise and update - 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.”
Lorne Vary, Finance Director of Brompton Bicycle, said:
“Effective cashflow management is paramount to any successful business, and I am pleased to see the Government and finance leaders are promoting this issue. There is some really useful guidance out there to help all businesses.
“At Brompton Bicycle we believe the key to getting paid on time is having strong accounting procedures in place as well as a good communication line with your customers. We also ensure due diligence is carried out on potential customers before offering a credit facility.”
Getting paid on time remains a problem for many SMEs and the Government wants to ensure they are aware of the advice and guidance they can use to combat this.
The Prompt Payment Code, run by the ICM, promotes best practice between organisations and their suppliers. Businesses and organisations that sign up to the Code commit to paying their suppliers within clearly defined terms, and also commit to ensuring there is a proper process for dealing with any issues that may arise.
Government strongly encourages businesses to become signatories to the Code - both to press home the importance of prompt payment, and to reassure customers and suppliers that they can be relied on both to pay on time and invoice promptly for payments owed.
Notes to editors
- The Association of Chartered Certified Accountants (ACCA), Experian, the Forum of Private Business and the Institute of Credit Management (ICM) have published a new guide to ensure prompt payment, aimed at owners and managers of small businesses. Get Paid! forms part of the four partners’ activity to encourage prompt payment, working together with the Department for Business, Innovation and Skills (BIS) and the private sector.
The advice provided in the ACCA’s Get Paid! guide is based on the upcoming publication, _Getting Paid: Lessons for, and from, SMEs, _and complements previous publications, such as the ICM’s government-endorsed Managing Cashflow guides, the Forum’s Credit Control guide or Experian’s series of small business guides.
Businesses can sign up to the Prompt Payment Code now at http://www.promptpaymentcode.org.uk/
Independent analysis by Experian suggests that current signatories to the Code represent over 60 per cent of total UK supply chain value.
BIS paid 93.6 per cent of invoices within five days in December last year, and averaged 95 per cent across the year.
BIS’s online newsroom contains the latest press notices, speeches, as well as video and images for download. It also features an up to date list of BIS press office contacts. See [http://www.bis.gov.uk/newsroom](http://www.bis.gov.uk/newsroom) for more information.
Notes to Editors
BIS Press Office
Department for Business, Innovation and Skills
020 7215 5303