Late payment should not simply be accepted as a fact of life by small businesses, according to a report from the Association of Chartered Certified Accountants.
In a recent report entitled Ending Late Payment, ACCA explains that governments around the world have attempted to end late payment, but that few have so far met with any great success.
But the organisation claims that there is a direct link between late payment and the availability of business credit – and that by ensuring a ready supply of funding for cash-strapped businesses, the UK government can reduce the prevalence of those trying to boost their own cash flow by failing to pay on time.
Andrew Leck, ACCA’s spokesperson on the issue of late payment, said: “The fact is, with the right intervention, late payment doesn’t have to be a fact of life for businesses.
“At its most basic form, late payment is a form of credit and in an ideal world, where all solvent businesses would have prompt, uninterrupted access to finance from diverse sources, late payment would be very rare.
“With a new government in place, we now have the perfect opportunity to stamp out our culture of late payment by taking a fresh look at the causes.”
He is calling for wider availability of trade credit in order to overcome some of the knock-on effects of late payment, which can sour customer relationships and ultimately collapse entire supply chains.
And the suggestions are likely to be welcomed by small firms in particular, as ACCA’s report says those with fewer than 50 employees are twice as likely to encounter late payment.
Whether ACCA’s suggestions will be taken into consideration by the current UK government remains to be seen; however, the argument that late payment should not simply be an accepted part of business is one we can all take to heart.
As such, small businesses and large firms alike have the opportunity to take clear action to protect their own cash flow against bad debt – whatever the government might decide to do on the matter.
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