The coronavirus pandemic has exacerbated Business late payments for UK businesses, new figures from the Institute of Directors reveal.
Over a third of company directors were polled by the IoD. They said they had faced an increase in late payments during the pandemic. Almost one in ten directors reported that they had experienced significantly more problems than usual.
The directors’ institute has warned that the challenge could worsen as restrictions continue.
To help solve the problem, Company Directors polled by the IoD were most likely to favour stricter penalties to penalise late payments. This was closely followed by giving the Small Business Commissioner powers to issue binding monetary awards in connection with disputes. This would enable the Commissioner to have a role overseeing resolutions between small businesses.
A Professional Business Debt Recovery service is also a reliable accelerator for non payments of business debts.
With hundreds of thousands of companies in the UK this may not be an option other than for large amounts. Even then, they could be subject to legal appeal rendering the whole process fruitless.
Despite the negative overall impact of the virus, some IoD members reported seeing fewer payment problems than usual. One Director advised that their main clients had even paid early as a means of support.
Roger Barker, Director of Policy at the Institute of Directors, said: “Sadly, late payments are a perennial issue for SMEs, and the pandemic certainly hasn’t helped things. With so much pressure on cash-flow, many companies have been left in the lurch through no fault of their own.
“Many directors are eager for the Small Business Commissioner to get to make a mark on the problem, but it needs more firepower. The ability to issue binding awards could make companies think twice before delaying payment.
“The reality is that there’s no silver bullet to solving late payments. The challenge is cultural, and won’t be fixed by one specific power or another. However, giving the Commissioner real teeth could send a strong signal that malpractice won’t be tolerated.”
Late or non payment of invoices is something is affecting thousands of small businesses every week. Some great tips on how to get your small business paid can be found here.
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