CM April 2020

CMNEWS
A round-up of news stories from the
world of consumer and commercial credit.
Written by – Sean Feast FCICM
Late payments are ‘business as usual’
for small businesses in difficulty
LATE payments from customers are
‘business as usual’ for many small
business owners in difficulty,
with nearly half (45 percent) of
callers to Business Debtline experiencing
problems with late payments from
customers, with most typically having to
wait up to two months beyond payment
terms to receive the money they are
owed.
Worryingly, only 41 percent of Business
Debtline callers affected by late payments
said they knew what to do to chase
customers who had not paid on time,
and only 16 percent knew where to turn
for advice on dealing with the problem.
Almost four in 10 (39 percent) worried
that if they chased late payments, they
would lose future business – but 84
percent said they had done everything
they could to resolve the problem.
Part of Money Advice Trust, Business
Debtline claims to have helped more
than 52,400 self-employed people and
other small business owners last year
with their debt issues. The charity has
written to newly-appointed Minister
for Small Business, Paul Scully MP,
recommending stronger measures to
tackle late payments in the wake of the
government’s recent call for evidence on
payment practices.
These recommendations include relaunching
and strengthening the Prompt
Payment Code, with a commitment
from all signatories to pay their small
business suppliers within 30 days or
less where faster payments/fintech
solutions are already in place. They also
include introducing fines for persistent
late payers, and expanding the Small
Business Commissioner’s remit to
include late payments between small
businesses. They would also like to see a
review of how statutory interest on late
payments of commercial debts is used
and could be strengthened as a means of
improving payment practices.
Joanna Elson OBE, Chief Executive of
the Money Advice Trust, says that paying
late has become business as usual: “This
can have serious consequences for both
the viability of the businesses they run
and their personal wellbeing,” she says.
“The government has already taken
several positive steps on late payments,
including requiring mandatory reporting
on the payment practices of large
businesses, and creating the Office of the
Small Business Commissioner.
“Stronger actions are necessary,
however, to deliver the scale and pace of
change required in payment practices
we need to fundamentally change the
culture – so that late payments are no
longer seen as an acceptable business
practice.”
Philip King FCICM, the Government’s
Interim Small Business Commissioner
welcomed the report as underlining
the negative impact on well-being that
can result from late payment: “It can do
huge emotional damage,” he told Credit
Management. “I hope it will serve as
a timely reminder of government’s
imminent consultation into broadening
the remit of the Small Business
Commissioner and encourage more
small businesses to respond. It’s an
important topic and will benefit from a
wide range of views.”
Sue Chapple FCICM, Interim Chief
Executive of the CICM, says that the
research also highlights how more
needs to be done to make small
businesses aware of the help that is
available: “Business Debtline could
seriously help small businesses
by actively directing them to
the CICM’s Managing Cashflow
Guides which have been
written specifically to support
small businesses in good
times and bad.”
www.businessdebtline.org
Advancing the credit profession / www.cicm.com / April 2020 / PAGE 6