28-06-2007
A job for number 11
Research by the European Commission shows that the burgeoning late payment culture in the UK is killing small businesses.
Late payment costs the UK economy about £20 billion a year and a third of small businesses admit to it being the biggest threat to their success. In fact, around a quarter of insolvencies are down to late payment.
In 1998 the Late Payment Act was introduced, intended to help businesses by allowing them to charge interest on outstanding payments. Unfortunately this isn’t a feasible option for many small operators when their businesses rely on custom from larger companies. Hard-fought for contracts and relationships could be ruined.
The unfortunate truth is that large companies and corporations often deliberately withhold payments on purpose as part of company policy, which inevitably is at the expense of smaller companies.
With a new chancellor at number 11, there are opportunities for new legislation supporting small and growing business in the UK. Tackling the issue of late payments would have a double impact on the economy – saving billions of pounds and helping thousands of young businesses to develop.
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