For the first time in ten years the Bank of England’s based rate recently went north instead of south.
That means suppliers looking to charge interest on late payments can add an extra 0.25% on top of top the maximum 8.25% they can already charge. Sadly that is not going to move the needle.
The average beyond terms debt is c. £16k, that means the average supplier can charge an average of £40 extra on the average debt. Unfortunately that’s a below average size disincentive and is probably not going to make much difference to the thinking of most debtors.
As Philip King, the CEO of the CICM said recently at the Telegraph newspaper’s Festival of Business, “there is no silver bullet” [re: the matter of late payment].
Mr King went on to say that to get paid on time it is important businesses know who they are dealing with, including whether their client is a limited company or a sole trader, what their reputation is like and if they’re in good financial health.
His comments wer’re supported by remarks from Richard Gilkes the Managing Director of Sort Chemicals who said :
“The majority of our customer base is (sic) SMEs and we have good payers and bad payers”
In other words late payment is not just a them vs us / big vs small issue, it is endemic across the business community.
Without wanting to come across as being in the least bit smug, this exactly what The Prompt Payment Directory has been saying for ages.
U.K. bosses also agree that a mix of government action and peer presssure should be brought to bear on the matter.
In other words the business community needs to help itself. Again, not just what The Prompt Payment Directory has been saying but indeed the very premise on which it was set up.