Trying to improve the ongoing problem of late payments to suppliers at key points in the supply chain, the U.K.-based Association of Accounting Technicians (AAT) comissioned a YouGov poll that found 73 percent of members of Parliament (MPs) agreed with the three changes AAT has recommended to the voluntary Prompt Payment Code regulation.
The proposed changes including making it compulsory for companies of more than 250 people in a range of industries, including fashion and retail, to cut the maximum payment terms in half to 30 days from 60 days. And anything not in line with that should face clearly defined financial penalty regime for persistent late payers enforced by the government’s small business commissioner.
The survey of 100 MPs found that 16 percent neither agreed or disagreed with the proposed changes, but no MP disagreed with the popular proposals.
AAT noted that its recommendations have already gained the backing of the recruitment and construction industries, small and medium-sized enterprises (SMEs) and most recently the Parliament’s Business, Energy & Industrial Strategy Committee, which backed the recommendations in a recent report on small business productivity.
“Late payments lead to thousands of insolvencies every year, damage productivity, restrict investment and can also impact on the mental health of small business owners and their employees,” Phil Hall, AAT’s head of public affairs and public policy, said. “Government action to tackle this problem, from the voluntary payment code to compulsory but feeble reporting requirements, as well as the creation of a small business commissioner with no real power, have all predictably failed to stem the scourge of late payments.”
The Prompt Payment Code sets standards for payment practices and is administered by the Chartered Institute of Credit Management on behalf of the Department for Business, Energy and Industrial Strategy (BEIS). The Chancellor of the Exchequer recently announced that BEIS would lead evidence gathering on how to eliminate unfair payment practices to small businesses.
Burberry Ltd., C & S Footwear Adaptions, Studio MB and Tempest Designs are already signatories to the code. Retailers signing on include Asda, Marks and Spencer, Next, Primark and Tesco.
Hall said the response to the survey should provide impetus for the government to take action. The Department for Business, Energy & Industrial Strategy recently held a public hearing on the issue of late payments and said it is currently “analyzing feedback.”