The recent announcement by the government to improve corporate transparency has been met with a luke warm reception in the press.
However, Mike Cherry, the national chairman of the FSB (Federation of Small Business) was at least cautiously optimistic in his assessment of the
potential impact on curbing late payment.
His comments, while a little vanilla, reflect the forward looking perspective of the FSB.
“Today’s corporate governance reforms includes a positive package of measures to improve the situation. Steps such as obliging the board members of big businesses to report on how they are fostering relationships with suppliers, as well as a new Financial Reporting Council (FRC) principle for greater engagement with suppliers and others, will make a difference…..
“If today’s package of measures, together with the Duty To Report on payment practices and the imminent appointment of a Small Business Commissioner do not shift the dial on late payments, then this will need to be looked at.”
BUT, “The Dial” hasn’t really been changing much for quite a while. Granted these reforms are new and need time to bed in but can they honestly be considered such a big step forward from the Prompt Payment Code (PPC)?
The issue is that, as with the PPC, emphasis is being placed exclusively on larger organisations to get their house in order. These are companies with generally unlimited resources and very strong political lobbying ties.
The government is unlikely to want to rock the boat for these organisation because while some of them may pay pitifully low corporation tax, they do at least provide jobs from which the govt. can levy it’s personal income tax revenue.
Jobs also result in political vaccination headlines around areas like falling unemployment rates and rising consumer confidence and while Brexit is going on nobody wants bad news coming out of the corporate sector.
Small businesses need to do more to help themselves and our research shows that they are trying:
- 22% have blacklisted late paying customers
- 39% enforce a late penalty fee
- a quarter (24%) have sought a County Court Judgement
- and more than a third (35%) have either used a debt collection agency or law firm, or an alternative low cost cash flow recovery service.
The more businesses that take action for themselves the louder the message will be that the small business / supplier community will no longer accept the situation as it stands.
At The Prompt Payment Directory we are not declaring war, in fact nothing could be further from it, we are simply saying that rating the payment behaviour (good or bad) of customers right the way across the UK business community is the best way to bring about the transparency that the government seeks but in a fair and balanced way.