Late payments have recently been in the spotlight, with the Government announcing new measures to deal with the problem. Escalate has been focusing on this issue for a while now, as well as the resulting bad debt and commercial disputes that can follow.
Policies need a practical mechanism for recovering funds. The Department for Business, Energy and Industrial Strategy (BEIS) has announced new measures to tackle late payments.
Key initiatives include:
In our view, successfully tackling late payment requires a cultural shift by large businesses, and the Department for Business, Energy and Industrial Strategy’s proposals have the potential to make a difference in this area. Strengthening the scope and power of the Small Business Commissioner and making company boards more accountable for the payment of suppliers will start to change attitudes at leadership level, and that will begin to drive better behaviour over time. Although the announcement includes some sensible measures to target businesses that refuse to pay on time, they’re unlikely to be enough by themselves.
Ensuring that SMEs have quicker and more cost-effective access to the legal system will be vital if the proposals are to have real bite, and accountants and lawyers have an important role to play there. Although the tide is starting to turn, we firmly believe that the current system is broken and stacked against SMEs.
We will continue to support businesses to recover the money they are owed through bad debts and other commercial disputes.