Contact our debt recovery specialists. Call 0141 331 2332
Getting paid on time: Can the Government help?
It goes without saying that one of the greatest bugbears for businesses is getting paid on time. In the past, the Government has helped with legislation. Indeed, the Late Payment of Commercial Debts (Interest) Act 1998 has gone a long way in reducing the length of time in which commercial debt is paid. In the event of late payment, this legislation (along with subsequent EU Directives which have been enshrined into UK law by statutory instrument) allows businesses to claim interest, collection costs and compensation. So, why does the problem persist?
The issue is that many business do not want to use the legislation because there is a fear that if a supplier were to use it against its largest customers then they could lose their business. The scale of the problem is enormous. According to Government statistics, currently £23.4 billion worth of late invoices are owed to small firms across the UK.
What can be done about the 'fear factor'?
It will surprise nobody that this huge amount of late payment seriously impacts on an affected business’s cash flow, and quite possibly its survival. Following the launch of its consultation in October, the Government is investigating whether the powers of the Small Business Commissioner should be enhanced. Under consideration will be the power for late payers to be ordered to make payment to their suppliers, either by lump sum or via a payment plan, following a complaint having been upheld by the Commissioner once a complaint being made by the supplier. If the default persists, further penalties, including fines, could be imposed.
What about additional powers?
The Commissioner will also have the power to force companies to disclose information during the course of an investigation. This may well include details about how the company treats its other suppliers of goods and services and whether they are also being paid late.
In an exclusive interview which the Commissioner, Philip King, gave to Credit Management, he explained that the new measures should go a long way to improving the UK’s payment culture. He said the issue had been carefully reviewed over the last three years and conclusions reached, not least, following 2019’s Call for Evidence.
King mentioned that, following a separate consultation, beefing up the Prompt Payment Code was also being considered. The potential reforms include paying 95% of invoices to smaller businesses within 30 days; introducing additional mechanisms to ensure compliance with the Code; and permitting the Code’s administrators to approach signatories following a third party complaint, such as a trade body.
Conclusion
It is hoped that these additional powers will encourage late-paying businesses to pay their outstanding invoices timeously. The fear factor of a third party complaint could well be dispelled if the supplier is anonymised. However, UK-wide legislation will be needed to introduce these proposals. A change in attitude and culture will develop as soon as the parliamentary timetable permits and the law changed. So, it is really a case of watch this space.
Testimonials
Yuill + Kyle are an extremely focused firm who are achieving great results for us north of the border. Their client-focused staff keep us 'in the loop' so we are able to make timely decisions, helping us to recover more of our money.
I would not hesitate to recommend Yuill + Kyle's services to other business colleagues. I recently sent Yuill + Kyle's pre-sue letter to 2 debtors. Within 2 days of Yuill + Kyle sending these letters one of the debtors paid his £560 and the other his £750, all for the fee of a 7 day letter!
I instructed Yuill & Kyle to send a pre-sue letter to my debtor. This resulted in the debtor paying their outstanding £2750. We also received a letter of apology from them!! Great result!!
I have to say that Yuill + Kyle have represented my best experience to date with solicitors, and although I was unable to take this matter further on this occasion I would have no hesitation in using you again or recommending you to others.
I would really like to recommend your services to everyone considering litigation. Your online service is fast, efficient and easy to use. We found that your costs are simply unbeatable for pre-litigation and I feel sure that when we require legal support, Yuill + Kyle will be our first choice.
Yuill + Kyle successfully recovered £19,000 for our client. We were delighted with their professionalism and fully intend to use them again in the future.
"Stephen Cowan displays calm equanimity in the face of challenging, complex and often adversarial situations, and responds quickly and professionally."
Contact our debt recovery specialists.Call 0141 331 2332
Stay in touch with Yuill + Kyle
Legal changes can have a dramatic impact on you and your business. To ensure you are kept up to date with the latest developments and have the knowledge to make timely, effective decisions, please sign up for our free updates.