Business, late payments and toothless regulation - Business Works
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Business, late payments and toothless regulation

by Lee Perkins, Managing Director, Sage UK Nearly two thirds of businesses have experienced late payments of 90 days or more in the last six months, a study by Sage UKI has found. Bosses of small and medium sized firms across the UK also gave a damning verdict for the Prompt Payment Code, established by Government in 2008 to tackle late payment, with only 5% classing it as 'effective' or 'extremely effective'.

An overwhelming majority classed the code as 'ineffective' (38%), or 'extremely ineffective' (16%). The remaining 41% said they had not heard of the code, which points towards a systematic failure of the Government to get to grips with late payment.

The survey of nearly 600 business owners also discovered that as a result of late payments:

  • One in ten (11%) suffered major cashflow difficulties. A third (33%) said they had experienced minor cashflow problems;
  • A knock-on effect in the supply chain, with 14% of firms unable to pay their own suppliers;
  • One in 40 firms (2.5%) were late paying wages to staff.

In the last six months, the businesses said that they had experienced late payments:

  • 30 days or more - 84% said yes
  • 60 days or more - 72% said yes
  • 90 days or more - 57% said yes.

Big businesses are the worst offenders for late payments, according to 45% of respondents. This was followed by small businesses (16%), the public sector (13%) and individuals (8%).

"Itís time for the Government to roll up its sleeves and get on with clamping down on the notorious late payers which are starving smaller firms of cashflow," said Lee Perkins, Managing Director of Sage UKI Start-up and Small Business Division, commenting on the findings.

"British businesses have given a damning verdict for the Prompt Payment Code which has proved toothless and ineffective. There has been plenty of rhetoric, but not enough action and firms are saying they are fed up."

"Thirty days is long enough, but itís absolutely criminal that the majority of firms experiencing late payments of sixty, or even ninety days."

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