Back in May last year I did some PR for the Prompt payment Directory and as part of that I ran a survey which looked at the human cost of late payment. The results were pretty startling with 29% of business owners saying they had suffered from some form of mental illness such as stress or anxiety.

Not only that but 36% had forgone their salary at one point or another while 21% had been unable to pay their mortgage or had to sell their home.

Losing something as fundamental as your home or having to take your children out of a school because a customer hasn’t paid your invoices is about as rough as it can get and yet this is happening all the time to a large number of business owners throughout the country.

Around the same time as I did my research study the fsb also published some research of their own basically saying that late payment was responsible for the closure of 50,000 businesses a year and cost the U.K. economy £2.5bn

Those too are pretty sobering numbers and yet still they didn’t really make national news.

Now Carillion has imploded and all of a sudden the nation is very aware of the cost of late or non payment and how it can affect small businesses, and yet this has been going on for years.

The first thing that comes to mind is that as a result of Carillion’s mess there will be some parents that will have some some very worrying times ahead of them and their children shouldn’t have to suffer for the crap job that Carillion’s top brass did in running that company.

The second thing that comes to mind is whether or not the chronic issue of late payment will move up a notch on the ladder of public and political consciousness and stay there or whether it will quietly slip back down again and continue life as the iceberg issue I wrote about in this post a couple of years ago.

We are having our “Titanic” moment in the context of late payment and as a very sad result there will be some families (hopefully not many) that will be devastated by it. We’ll need to remember this moment and redouble our efforts in terms of corporate governance and supplier due diligence to make sure it doesn’t happen again and keep the self employment dreams of millions of talented people alive for many years to come.

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.


While we were out to lunch recently we were chatting about late payment and heard this typical story.


Basic scenario involves a recruitment company retained to supply contractors for a large UK telco. The (telco) customer might ring up at a moment’s notice and need somebody in the very next day to start work. The supplier duly obliges and the contractor begins work. But come time to invoice the telco, upon receipt of the invoice, refuses to pay because there’s no purchase order.

In the mad rush to fulfil the job spec a PO was not sought and not given. The telco is a VERY large organisation and is thus by definition incapable of thinking outside the bureaucratic box, net result the supplier (aforementioned recruitment firm) is paid late. Much wailing and grinding of teeth.


‘Why not request the PO in advance?’  we asked

‘Not enough time?’  we were told.

‘So what happens if this causes a major cashflow issue?’  we asked

‘What can we do, they are huge and we didn’t want to risk dropping off the preferred supplier list?’  we were told.


Some head scratching on our part… how can the constant spectre of major cashflow issues be the right way to run a business? And anyway aren’t preferred supplier lists run on an, ahem, pay to stay basis?


What’s to be done?

Non payment due to the absence of a PO number on invoices in circumstances where one is required is not uncommon and really not necessarily the fault of the customer.

It’s as likely to be an admin oversight that should have been addressed when the recruitment co. successfully made it on to the preferred supplier list.

It seems a bit silly to run a business where services might be needed on a 24 hr turnaround without having some kind of pre-arranged covering PO.

It is the responsibility of both supplier and customer to ensure that POs are sought and supplied but we would obviously add that doing due diligence beforehand as well as anonymously sharing this kind of information will, in the bigger picture, result in fewer such circumstances.


As always, a little bit of info coupled with a smidgen of forethought can go a long way to resolving problems like this before they ever reach critical mass.

In the third of our series of interviews with David Walker of Cashflow Rescue we talked to him about standing up to supply chain bullies.

From his work with small businesses in debt recovery David has plenty of experience of supply chain bullying.

Read on to learn what he has to say.

PPD: In your experience what are the underlying issues that lead to late payment?

DW: I think, unfortunately, there is a culture of paying late and there is a knock-on effect throughout the supply chain. This is then compounded by the fact that suppliers are very reluctant to take any positive action to speed up payments due to the fear of losing future business


PPD: How important is due diligence in reducing the impact of supply chain bullying and late payment?

DW: It is certainly important to have an awareness of what is going on, but any information is only useful if you act on it.

The press is always full of stories about supply-chain bullies but you never hear of supplier refusing to supply them!

Late payment and supply chain bullying are both issues that individuals and small businesses can stand up to if they are prepared to. Bullies don’t bully everyone – only those with whom they know they can get away with it!


PPD: What are your views on preferred supplier lists, so called “pay to stay”

DW: Personally, I don’t like “pay to stay” arrangements. They seem to be just another way of the client cutting margins and putting an ever increasing squeeze on their suppliers.

However, if this is what you have to do to be a preferred supplier, the choice is yours. But, make sure you are fully aware of what you are getting into. Know what your margins are and what profits you are making.

If you’re not making a profit, then you’re better off not working with the supplier.


PPD: What strategies can existing suppliers use to guard against “pay to stay”?

DW: The best thing you can do is to give yourself a choice of clients / customers to supply to. I appreciate that this is difficult when some businesses are so reliant on a particular supplier, but you always have a choice.

Also, the more of a commodity you are, the easier it is to replace you, so make yourself indispensable to the customer.

Think about what you can do to change your business, the products or services you supply, or the customers you supply to. Just because you have always done business this way it doesn’t mean you have continue doing business this way in the future.


PPD: What would you say is the most effective argument a small business can adopt when faced with a customer that asks for a discount in return for paying on time?

DW: If you are going to agree to a discount, it should be agreed up front, not when the invoice is overdue. Also, I would make it conditional on payment being early – not on time.

If a client asks for a discount when the payment is already late, then you always have the option to say “no”. If you’re worried about future work, that’s quite understandable, but do you want to carry on working for clients like this?

As I have said before, give yourself options and you will be in a much stronger negotiating position. However, if you’re cash flow is so desperate that you need to agree a discount do so, but make it according to strict conditions. I.e., X% off if you pay within the next 3 days. If not, the full amount becomes due.


PPD: Many larger organisations have 60 or 90 day payment terms while almost all small businesses operating on 30 day payment terms; what would you say is the most effective way for small businesses to get agreement for 30 day payment terms?

DW: When you enter into the agreement with the customer, discuss payment terms. Find out what it would take to be paid in 30 days. They will be paying their staff monthly, so why can’t they pay you monthly?

When you have agreed what needs to be done, do it! It sounds obvious, but so many people I speak to complain about being paid late but when I look at the problem they have invoiced late, missed a purchase order number off an invoice, they have sent it to the wrong person, they haven’t included time sheets, or anything else that needs to be done.

If the customer really won’t pay any earlier, make sure you invoice on time and budget accordingly.


PPD: Any final thoughts?

DW: Late payment and supply chain bullying is always a sensitive subject. However, in my experience there is always far more a small business can do to improve their situation.

Waiting for legislation changes or a change in culture is a waste of time.

All small businesses should take a careful look at what they are doing. They should give themselves as many options as possible and make themselves as indispensable as possible to their customers and clients. This gives them negotiating power and then they can reduce the impact of late payment on their business.

Also, all business should have a 13 week cash flow forecast so they know what money is coming in and what is going out. Then there are no surprises.

If you know you have to wait 90 days for payment and you have agreed to this, you can budget accordingly. Sometimes, setting out cash flow forecast on a spreadsheet is just the wake up call they need.

Now, don’t get me wrong, I love working with small businesses and I’m 100% supportive of them, but in most cases, they’re not doing nearly enough to help themselves. This needs to change first, and then we might see some changes in the late payment culture in the country.


David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry – advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights. David set up Cashflow Rescue as a low cost legal alternative for small businesses with debt recovery problems.

This post will outline the essential questions that need to be asked by suppliers in order to ensure payment is made on time.


As mentioned in previous posts, not all late payment is due to intentional efforts to avoid payment as is so often alluded to in the press.

The popular narrative is that large publicly listed organisations like to delay payment to their suppliers for as long as possible in order to massage their balance sheets and pump up their share value. Indeed there are plenty of examples of this (although care should be taken not to conflate supply chain bullying with late payment).

But in lots of cases late payment can be just as easily attributed to administrative burden at the customer end or mistakes made by suppliers in submitting their invoices.



The Prompt Payment Code

As part of their voluntary commitment, signatories to the Prompt Payment Code are given the option to complete a form which provides information that suppliers need to ensure they are paid on time.

Unfortunately this form is, like much else relating to the Prompt Payment Code, voluntary. As such many signatories, including some of the highest profile like Tesco, have yet to complete it (at the time of writing). However, it provides a nice template that can be used by all suppliers when entering into a business contract with a customer of any size



What to ask about

The form (an example of which can be seen here) sets out nine key areas of information which suppliers should enquire about. They are as follows:


1. Address to which the invoice should be sent.

This is obvious especially if invoices still have to be submitted in hard copy and by post. It’s also worth checking that the address to which the invoice must be submitted is also the address that should be put at the top of the invoice. Some companies require that all details displayed on invoices should be 100% correct in order for the invoice to be processed and payment made, it is possible that the address to which an invoice be physically sent and the nominal billing address can be different so it makes sense to check first.

Of course if invoices are submitted via email then check the email address is correct, however it’s still worth confirming what billing address should be put at the top of the invoice.


2. Purchase order number

Some organisations operate a purchase order (PO) system and some don’t. It’s important to find out…:

  1. If the customer operates a PO system
  2. What the PO number is for your job (if a PO system is in operation, the PO number is something all suppliers should have before beginning work).
  3. If a PO system is in operation find out if it is mandatory for the number to be quoted on the invoice (which it almost certainly will be) and in what format should it be displayed – for an example regarding formatting, see the Skanska form here.

Not quoting a purchase order number, if one has been issued, will almost certainly hold up payment.


3. Any specific details required on the invoice

This could be anything. It could include:

  • Your quote reference number or any other relevant document numbers
  • Correct customer name
  • A detailed description of the work done and / or a breakdown of time spent on the job.
  • Your client contact’s name
  • Your contact details
  • VAT registration number
  • A copy if the original quote

You won’t know exactly what needs to go on the invoice unless you ask.

It’s possible that there will be no specific requirements but if there are and these do not appear then the invoice will take longer to process.

Additionally, the invoice may not actually be looked at until the payment deadline approaches and because of this it could be returned with a request for an amendment which, if not completed in time, might push the invoice back into the next cycle thereby delaying payment.


4. Payment run dates

Check when these are. If possible get exact dates or days e.g. last Friday of each month.


5. Invoice approval

The invoice approval process is a set of internal checks that are required before payment can be made. These are supposed to prevent money from being paid out without the correct authorisation. This approval process takes time. A nice summary of the process can be found here.

Make sure you know how long the invoice approval process is and how it relates to your agreed payment terms.


6.  Dates by which an invoice must normally be received.

It follows that invoices must be submitted by a certain period which accommodates both the agreed payment terms and the invoice approval period. But to ensure that all ‘i’s are dotted and all ‘t’s are crossed suppliers should find out when to to submit their invoices. Ideally get a date or day on each month.


7. Contact details

Suppliers should make sure they know exactly who to send invoices to, this means:

  • email addresses
  • contact name(s)
  • phone numbers

It also makes sense to have a back up set of contact details in the event that the primary contact is away.

Quite often the contact email address to which invoices should be sent is a generic one such as . If this is case you (the supplier) will not know exactly who is responsible for your invoice.

In this event always copy in your business contact when sending invoices. Also still try and gather a name and contact number for the individual(s) in the finance department who will deal with your invoice.


8. Dispute resolution

Ask how disputes are dealt with, this should also be written into the contract.

Dispute resolution could be dealt with via a disputes department or the person who made the original purchase of the supplier goods / services.

Regardless be prepared to escalate if need be.


9. E-invoicing

This mainly refers to e-invoicing systems as opposed to simply sending invoices via email.

The e-invoicing service sector is a growing industry in it’s own right and organisations are now starting to use these tools as part of the wider procurement process.

Using an e-invoicing system can help cut down on bureaucracy and reduce uncertainty around the invoicing processes but an investment may be required on the part of the supplier.


Bonus: Payment terms

This is where you (the supplier) may have to negotiate but it is vital that this issue is addressed in advance. Your payment terms of 30 days may not match your customer’s payment terms. If this is left unresolved your customer could assert that their payment terms of 60 or 90 days prevail.

This is where disputes unintentionally begin; where they end is often the bigger problem.

This is the first in a two part post explaining why the solution to the issue of late payment in the UK is not just a technical one.

An industry is steadily growing up to help suppliers in the UK navigate the issues related to late payment of commercial debts.

The current batch of tools and services available to suppliers to help tackle the problem can be divided into two categories, those that deal with the issue before it arises and those that deal with it after it has arisen.


  • Credit reference agencies
  • e-invoicing solutions


  • Debt collection agencies
  • Invoice factoring
  • Invoice financing
  • ‘Going legal’


The data speaks for itself

BACS debt data

Source: BACS

The data above from BACS shows that the issue of late payment isn’t abating. While it fluctuates it has yet to show a sustained drop and even if it does, £30bn is a long way to go down.

Added to which the BACS data is a conservative estimate with ABFA indicating the figure could be as high as £67bn and Zurich suggesting as high as £255bn. Indeed the ABFA figures show a steady increase since 2011 with no sign of the issue easing.

The data therefore shows that in spite of all the current tools and services on offer for suppliers to use the impact has yet to be meaningful.


Everybody keeps talking about a shift in mindset…

Most people now agree that what is really needed is a significant change in mindset. However, while some think this change needs to come from the customer / large organisation, TLPD believes that in addition it also needs to come from the supplier.

An example of this is highlighted by an anecdote we recently learned of in which a supplier providing goods to a major, retailer submitted an invoice and was only paid part of it. Upon enquiring the retailer explained that they had run a BOGOF on the supplier’s product and that the terms of the contract (which both parties agreed to) stated that such offers would be paid for by the supplier. This resulted is what might loosely be defined under the heading of late or non payment but in fact, while arguably a borderline ethical practice, it was entirely legitimate.

The reason why the supplier was caught out by this was because they had not adequately read the terms of their contract. This is not necessarily the fault of the customer.

As such the change in supplier mindset we are talking about here relates to suppliers accepting a greater level of responsibility and taking more control over their cashflow.

Update: Part two of this post can be read here.

Get to know your customers and solve the problem of late payment

Via the results of their SME Confidence Tracker Bibby Financial Services have found that among other things a quarter of SMEs experience bad debt and about the same proportion see their profits fall as a result.

In response to the findings Bibby suggest that businesses should take the time to get to know their customers by which they mean, find out if you are about to do business with a customer that might pay their invoices late.


Know your customer

It’s slightly over cooking things to view customers as the enemy but sadly this can sometimes be not far from the reality once a large invoice is overdue by 180 days or more. While research shows that suppliers are often reluctant to engage legal council to help with the matter, the very fact it becomes and option indicates that the situation is moving towards a more adversarial stance.

It makes sense to know as much as possible about the people and organisations that will come to owe you money and there are several resources that suppliers can use. County Court Judgements (CCJs) against directors, company returns, winding up petitions to name a few. Many of these can be obtained from credit agencies.

Some agencies now also offer a traffic light system to give subscribers an “at a glance” view as to whether a potential customer is liable to pay late, green and you’re in the clear red and you’re not.

These data sources are helpful in that they give an impression of what the situation is, but they don’t give an impression of ‘why’. To illustrate the point, the traffic light system is equivalent to saying Jo Bloggs is a terrible person without explaining why.



At The Late Payment Directory we believe that context is vital. The spectre of late payment shouldn’t always be a reason for hesitating over a piece of new business. Knowing why a company has paid some of its bills late can help in determining if it has an institutionalised culture of late payment in which case one should indeed tread carefully, or if instances of late paid bills have occurred due to more understandable and unavoidable circumstances such as the absence of a PO on the invoice or the trickle down effect from upstream supply chain late payment issues.

It’s our aim to provide a platform to help deliver this vital context and give businesses the confidence to take on work from customers in situations where the circumstances may not be quite so cut and dry. To find out more click here.