An alternative manifesto on late payment – by Philip King FCICM
28 November 2019
The manifestos are out, the deadline for registering to vote has passed, and the general election is now just two weeks away. Interesting political times and we wait to see what the future will look like.
Whatever the outcome of the election, I’m pleased to see that the focus on late payment is unlikely to go away. I thought it would be interesting to see how each of the three main political parties address the topic, and what their commitments are. All three manifestos talk about about meeting business needs but, in relation to late payment specifically, these are the relevant words:
Labour says: ‘We will tackle late payments that leave small businesses waiting months to be paid, including banning late payers from public procurement.’
The Liberal Democrats say: ‘We will require all government agencies and contractors and companies with more than 250 employees to sign up to the prompt payment code, making it enforceable. [We will] ensure that the company at the top of a supply chain cannot abuse its position to shore up its own cashflow at the expense of smaller suppliers.’
The Conservatives state: ‘We will support start-ups and small businesses via government procurement and commit to paying them on time. We will also clamp down on late payment more broadly and strengthen the powers of the Small Business Commissioner to support small businesses that are exploited by their larger partners.’
For the sake of completeness, the Green Party commits to: ‘Require businesses to report the difference between agreed payment days and actual payment days. We will introduce fines for large companies that fail to pay small businesses on time.’ SNP MPs will support the introduction of effective legal protections to ensure small businesses are paid on time, and the Brexit Party makes no mention of late payment in its ‘Contract with the people’.
Laudable intentions from all the parties then, and little I’d argue with. Of course, as always, the devil will be in the detail and moving from positive words to effective action represents the challenge. No single silver bullet will resolve the issue of late payment, and credit professionals understand how complex an area this is. It always seems so simple and the manifesto words exemplify this but, in reality, it isn’t.
When is a dispute genuine and when is it a ploy to delay payment? When are extended payment terms genuinely negotiated and in the interests of both parties to the contract, and when aren’t they? When is Supply Chain Finance used as a means to support small suppliers by allowing them to access earlier payment and when is it used to camouflage poor treatment of the supply chain? When is the invoice approval system designed to ensure invoices get processed and paid quickly, and when is it a bureaucratic method to slow the whole process down to the detriment of suppliers?
These and many other questions are all part of the payment practices landscape and credit management professionals understand the complexity, and manage their customers taking them into account. If I was drafting a manifesto, it would include a commitment to fund training for every small business on how to manage credit, from before order through to cash receipt, effectively. Now there’s an idea………