Page 24 - BOSS Today Issue 14

he widespread practice business as a result. payment is a private sector worth some £70bn, it’s clear that
of companies delaying The research also showed that problem, but almost a fifth the public procurement process
tpayment to their suppliers businesses who embrace credit (18 per cent) point to public could be used to promote better
can have a crippling effect on control procedures of some form sector organisations as the main payment practices.
small firms. are significantly less likely to culprits. The government is also
a survey by BOSS federation’s suffer as a result of late payment. at central government level, backing the Prompt Payment
sister organisation the BPif even so, less than half (44 per there is a clear commitment code, which aims to promote
suggests that late payment by cent) employ formal credit to paying invoices on time. best practice between
customers now ranks second control procedures, with 38 per On 21 May, responding to a organisations and their suppliers.
highest in printers’ top three cent relying instead on a mix of parliamentary question asking Signatories to the code commit
business concerns, while nearly formal and informal processes, him if he will take steps to to paying their suppliers within
half (46%) of respondents had and 16 per cent juggling ensure that payments to public clearly defined terms, and also
been obliged to accept longer payments on an ad-hoc basis. sector contractors hired by his commit to ensuring there is
payment terms from customers Only a third of respondents (33 department are made within 30 a proper process for dealing
in order to help retain or secure per cent) offer prompt payment days, BiS Minister Mark Prisk said: with any issues that may arise.
business. incentives, while just 30 per cent “The Government aims for the This means that suppliers can
So can anything be done? The use existing legislation to charge public sector to lead the prompt build stronger relationships
Late Payment of commercial interest on late payers, and 40 per payment agenda by example. with their customers, safe in
Debts act was introduced in cent use cash flow management accordingly, central government the knowledge that they will
1998 and granted businesses software. in addition, debt departments are committed to be paid. independent analysis
the right to claim interest on collection agencies are employed paying 80 per cent of invoices by experian suggests that
late payments. But given the by 42 per cent of respondents, within five days; further, central current signatories to the code
risk of losing customers if this 43 per cent keep a reserve in the government suppliers are represent over 60 per cent of
right is exercised, the legislation bank to offset late payments, contractually required to pay total UK supply chain value.
hasn’t provided a solution for while invoice discounting is seen their Tier 2 subcontractors within To check whether a
many office supplies or print as a solution by just 26 per cent 30 days, driving the benefits customer has signed up to
businesses. in addition to those of businesses. Remarkably, the of prompt payment down the the code, log onto www.
customers who pay late against findings come despite many supply chain. in april 2012, the promptpaymentcode.org.uk and
agreed credit terms are those small firms acknowledging Department paid 91 per cent of click ‘code signatories’.
who impose extended payment that there are proactive steps invoices within five days”. if any of your customers
periods (often retrospectively) on they can take to minimise the The situation with local are signatories and either pay
suppliers as a condition of their problem. Submitting invoices authorities is less encouraging. late or seek to extend terms,
securing future work. promptly is seen by 97 per cent The Graydon/fPB survey found why not remind them of
Research published in april as the most effective method that overall the average time the commitment they have
this year by the commercial of minimising late payment, local authorities took to pay made? Business reputation is
credit referencing agency followed by telephone contact invoices was almost double the of increasing importance to
Graydon UK and the forum of with a customer after an invoice 10-day target, at 19 days. The UK many companies these days,
Private Business revealed that 51 has been submitted (79 per cent), average for the payment of bills particularly large PLcs and other
per cent of companies cite late using credit checks (76 per cent), within 10 days was 42 per cent, organisations in the public eye.
payment of trade invoices as a and refusing to complete work in but significant regional variations
problem. 23 per cent indicate the future (61 per cent). meant that this figure was as n KEEP UP-TO-DATE
that late payment is a serious in identifying who the worst high as 52 per cent in some WITH THE LATEST
problem, with 16 per cent saying offenders are, most respondents areas and as low as 11 per cent NEWS AT
they have almost been put out of (81 per cent) believe late in others. With public contracts www.bossfederation.co.uk.

September/October 2012 | BOSS TODAY 31