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The review, published in November 2023, calls for greater and more transparent reporting for businesses in an attempt to reduce the threatening late payment culture.
The report details the context surrounding late payments on UK businesses and the impact it has on cash flow – particularly on small-medium sized enterprises (SME’s). In 2022, UK SME’s were owed an average of £22,000 in late payments. Thankfully, the report reveals that the average time taken to pay SMEs has reduced from 81 days in 2010 to 36 days in 2021. The improvement in late payment time is a positive but more still needs to be done on the back of the report’s findings.
Lynne Darcey Quigley, CEO and founder of Know-it comments: “It is good to see the government taking notice of one of the biggest dangers to our business community. Late payment culture and the subsequent effect it has on business cash flow health.
“Ensuring businesses are reporting on payments will add clarity and accountability to the invoicing process. At the same time, it is important to ensure a balance is struck to ensure businesses are not burdened with too much reporting in this process.
“This is where technology can step in and take on a lot of the workload on behalf of credit controllers. Having the ability to credit check prospect suppliers and customers before you enter into partnership is the first step businesses can take to protect their cash flow. The latest solutions can now advise SMEs on a business’ credit history and show whether or not the prospect is a high late payment risk.
“Eliminating the risk of falling victim to late payments before entering into partnership is the proactive protection technology can now offer SMEs at a time when they need all the support they can get their hands on.”
As part of the report, the challenge of raising the publicity around late payments is discussed – which will be driven by greater messaging from the Minister for Small Business.
Lynne continues: “SMEs will be buoyed to hear that late payments have now caught the attention of government. For too long it has been the silent threat which has damaged and often sunk businesses over the years.
“If the government wants to be taken serious on this threat, then it needs to be vocal in its messaging and warn frequent late payers on the damage they inflict upon other members of the business community. Taking meaningful action and speaking openly about late payments will further close the gap in average time taken for payments to be made and deter frequent offenders.”
Lynne concludes: “The latest review into payments and cash flow by the UK Government is a step in the right direction for our business community. At a time when SMEs are feeling the pressure on multiple fronts, it is now the time for the late payment scourge to be extinguished for good.
“Government action, coupled with the help of technology can prove to be the shot in the arm so many businesses need to ensure their cash flow is healthy and secure. The latest solutions are readily available to monitor and identify late payers and with the support of government, should be able to effectively clamp down on frequent offenders. It is positive to see increased attention highlighting late payment culture and see the average payment time diminishing slowly over the years, but more does need to be done to protect the SME community.”
