ICM Supports Industry Drive to Tackle Late Payment
13 December 2011
The Institute of Credit Management (ICM) has thrown its weight behind an initiative from the Forum of Private Business to tackle the issue of late payment.
Philip King, Chief Executive of the ICM, has added his signature to a letter to Mark Prisk, the Business Minister, from more than a dozen business leaders that calls for a clear and detailed plan from the Government to help small businesses improve cashflow, create employment and drive economic growth.
“Late payment continues to be a major problem for small businesses,” he says, “and what is needed is a more co-ordinated and consistent message from Government on how it should be tackled.”
While Mr King welcomes the Government’s recent ‘Finance Fitness’ campaign, launched in November, he believes the Government should do more to support those initiatives that are already in place, such as the Prompt Payment Code: “The Government is great at getting such initiatives underway, but lets itself down on the follow-through,” he says. “As such its actions can appear disjointed and more focused on chasing headlines rather than executing well-conceived ideas.”
The letter references a number of specific actions the Government could take, including strengthening the Prompt Payment Code, and requesting businesses to sign up to the code by making it an ‘opt out’ rather than an ‘opt in’ arrangement.
The recommendations also include: making a 30-day payment period mandatory (in the absence of any specified/agreed payment terms) in line with the new EU Late Payment Directive; clamping down on the actions of larger companies changing payment terms and conditions mid-contract; and requiring FTSE companies to report more detailed information on their payment times.
But Philip also believes that small business should be doing more to help themselves: “The onus cannot all be on the Government,” he says.
“Small businesses could be much more proactive in trying to minimise the impact of late payment via measures such as improved credit management,” he says, “and getting the basics right. Suppliers need to talk to their customers and make sure that whenever terms are being negotiated, or payment terms extended, they are getting something in return.”