Commons debate highlights value of professional credit management
15 September 2011
MPs not doing enough to use late payment help already in place
The recent debate by MPs into the issue of Late Payment once again highlights the need for more informed dialogue between the credit industry and Government according to a leading business organisation.
In welcoming the debate, Philip King, Chief Executive of The Institute of Credit Management (ICM) is concerned that politics and personal prejudices might still be getting in the way of progress.
He was particularly commenting on the references made to the Prompt Payment Code (PPC) managed by the ICM for The department of Business Innovation and Skills (BIS) which has so far achieved 1,000 signatures: “This was seen as a failure by some who wanted to know why the Government wasn’t doing more to support it,” he says.
“To a large extent we agree and share their frustration. I take Ed Davey’ point (as The Parliamentary Under-Secretary of State for BIS) that 1000 signatories represents 60 percent of the total UK supply chain, but put another way that still leaves 40 percent who have yet to buy in to the concept. Politics should be left to one side of such an important issue; MPs of whatever persuasion should be doing more to promote it.”
Philip also says that it is important not to over-simplify the issue as one of big businesses being bad, and the smaller businesses as the downtrodden masses: “Late payment is an issue across the piece, and actually what we need to be doing is looking at how we support business with better professional credit management advice, such as in the ICM/BIS Managing Cashflow Guides that were also mentioned in the debate.
“We do not need new initiatives; we simply need politicians and Government to get behind and do more to promote what is already there.”
Philip was also concerned over certain references to the Banks, and in particular the value of factoring and invoice discounting. Gordon Birtwistle Liberal Democrat MP for Burnley believes that banks, rather than helping small businesses whose cash flow is suffering from late payment, ‘shove the companies down the invoice-factoring route’. He described this as an extra cost where the banks make more money without as much risk.
“I am not sure how helpful such comment really are,” says Mr King. “Factoring and Invoice Discounting is an appropriate credit management strategy for many successful businesses, and linking it back to being ‘finance of the last resort’ is an old and tired debate.”
The debate was led by Debbie Abrahams (Labour MP for Oldham East and Saddleworth) who used it as an opportunity to announce that the Oldham Metropolitan Council had now agreed to sign up to the code, and called on other councils and other large businesses to do so.
For more information please visit:
Prompt Payment Code website: http://www.promptpaymentcode.org.uk/
Managing Cashflow Guides: http://www.creditmanagement.org.uk/bisguides.htm.
Transcript of the debate
Video link to the debate