The Government
and industry is calling on businesses and public organisations to
pay suppliers on time and for small firms to pursue those who put
them at risk by delaying.
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
1. 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.
2. Businesses can sign up to the Prompt Payment Code now at http://www.promptpaymentcode.org.uk/
3. Independent analysis by Experian suggests that current
signatories to the Code represent over 60 per cent of total UK
supply chain value.
4. BIS paid 93.6 per cent of invoices within five days in
December last year, and averaged 95 per cent across the year.
5. 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 for more information.
Contacts:
BIS Press Office
NDS.BIS@coi.gsi.gov.uk
Dan Palmer
Phone: 020 7215 5303
dan.palmer@bis.gsi.gov.uk