Bosses: ‘No Silver Bullet’ on Late Payments

Bosses have said that talking about Britain’s culture of late payments needs a mix of peer pressure, persistence,  and government action.

“There’s no silver bullet here,” said Philip King, the chief executive of Chartered Institute of Credit Management. at The Telegraph’s Festival of Business.

Successive governments have unveiled new legislation to tackle the problem but to little avail. According to the Federation of Small Businesses, one-third of payments to small businesses are late, causing about 50,000 firms to fail every year.

However, the managing director of SME Stort Chemicals, Richard Gilkes, warned against regarding it as a “them and us” scenario.

“The majority of our customer base is SMEs, and we have good payers and bad payers,” said Gilkes. “The most important thing to understand is things can get better.”

Aviva’s business manager of accounts payable, Sandra Cotton, said that new rules requiring large businesses to report how quickly they pay suppliers will help.

“Reporting will raise the profile of [late payments] internally so we can see who is paying on time and who isn’t,” said Cotton.

King said that to get paid on time, it is important that businesses are aware of who they are dealing with, including whether the client is a sole trader or a limited company, what their reputation is like and if they are in good financial health.

King added that suppliers should always confirm terms up front.

“If you don’t agree to payment terms until after you’ve supplied, you’re on to a loser.”

Cotton said that when dealing with big organisations, it is important to know about the contact details of somebody who works in accounts payable.

“Often the person who instructed you in first place is not the person who will pay your invoice,” said Cotton. “Have a go-to person and know what area of the organisation you need to speak to should the process fail.”