News

July 16, 2010

Small suppliers still left waiting for payments

A new campaign to promote prompt payments to businesses has been launched by the Bankers’ Automated Clearing Service (Bacs), after its research revealed that small firms are waiting 9.5 days longer to get paid than a year ago.

A survey carried out by Bacs in December last year found that small firms are being forced to wait an average of 41 days longer than their original payment terms before invoices are settled. This figure represents an increase on June 2009 when firms waited an average of 31.5 days longer than their terms to get paid.

BACs said the aim of its campaign, which is being run in conjunction with the Institute of Credit Management (ICM), is to improve awareness of the Prompt Payment Code, which the ICM set up two years ago.

Businesses which signed up to the government-backed Code have committed to paying their suppliers within a clearly defined time scale and to deal fairly with any invoice disputes or complaints.

The Forum of Private Business (FPB) said it welcomed the new campaign and added that smaller suppliers were often more at risk from not getting paid than larger organisations. “To date, too few of the UK’s bigger businesses have signed up to the Code, and many small suppliers are afraid to take them on publicly or in the courts,” said an FPB spokesman.

Even though official figures showed most government departments were now paying main contractors within 10 days, many smaller subcontractors and suppliers had been left waiting for payments for “months at a time”, the spokesman added.

FPB head of policy, Matt Goodman, said public departments should make payment times to suppliers publicly visible, and stipulate prompt payment to all subcontractors as a condition of a contract. “The risk is that that more firms go under as they are unable to maintain any kind of cashflow because of late payment from larger companies,” he said.

Bacs head of marketing, Mike Hutchinson, said the campaign would “add momentum” to the Code, by tackling the UK’s late payment culture and helping businesses understand the different ways they could pay suppliers, such as direct credit payments into bank accounts.

“A series of nationwide events aimed at improving business awareness of the issue is currently being planned,” he said.