18-04-2008
Credit managers demand late payment legislation reform
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Credit referencing agency Graydon UK today called upon the Government to do more to support small businesses in protecting their cash flow during these times of economic instability.
Small businesses are suffering more than usual because of the credit crunch and the British culture of late invoice payments.
Managing Director of Graydon UK, Martin Williams, said: "The 1998 Late Payment of Commercial Debts (Interest) Act simply hasn't worked and whilst the prospect of further interest rate cuts will be warmly welcomed by the UK's small firms, this alone will not cure all the ills of the ongoing credit crunch. Late payment is starving businesses of cash which is rightly theirs and is heightening the risk of them going to the wall in an already incredibly challenging economic operating environment."
Research shows that the Act has not been widely applied, in particular by those smaller, more vulnerable companies the law was designed to help. Over 50 per cent of all trade debts remain overdue at any one time, with larger companies often at fault. This figure remains unchanged from a July 1999 report featured in the International Small Business Journal. Recent research by BACS, the payment processing industry body, also estimates the value of outstanding payments owed to small and medium sized enterprises in the UK at a total of £18.6 billion.
Philip King, Director General of the Institute of Credit Management, said: "Cash keeps businesses in business and without it they will fail. We need to ensure that small businesses in particular are well prepared and supported in what could prove to be significantly challenging times ahead.”