Yesterday, in the Spring Statement, Chancellor Philip Hammond announced the first steps to tackle the destructive impact of the late payment culture on the UK’s freelancers/sole traders and SMEs. The Chancellor said that he will require company audit committees to review payment practices and report on them in their annual accounts.
This is a good first step but isn’t enough to stop large companies using smaller ones as unofficial lines of credit.
According to the Federation of Small Businesses, 58% of their members are owed up to £10,000 in late payments from their clients. 15% are owed between £10,000 and £20,000, and an incredible 27% are owed over £20,000 from their late paying clients.
Philip Hammond signalling action on the scourge of late payments is very welcome news. The requirement for company audit committees to review payment practices and report on them in their annual accounts is a step in the right direction. That said, promises have been made to small businesses before – and these have either never materialised or have been broken. So, we will have to wait and see if this new action really does help to crack down on late payments.
We’d like to see the worst offenders named, shamed and fined. Having to release details of their payment practices is definitely a step in the right direction, as we will now be able to see who is consistently using freelancers and SMEs as unofficial lines of credit.
Everyone deserves to be paid on time for the work they do. For too long, many big corporates have been riding rough-shod over freelancers and SMEs, we need to ensure these companies play fair. Essentially, what we are asking for is a level playing field. Big companies are often the first to threaten legal action if payment is late but are the last to pay their suppliers.
Mr Hammond said more details about the steps the government will be taking to tackle late payments will be released in the next few weeks – and we look forward to seeing these. In the meantime, small businesses and freelancers also need to step up and make more use of the technology and data available to them to help them decide who is a risk, and who isn’t.
ABOUT THE AUTHOR
Inna Kaushan is co-founder of Solna, a smart invoicing platform powered by credit score data. Solna speeds up the invoicing and payment process for freelancers and small businesses. Through leveraged credit data that is overlaid on the platform’s invoicing and reporting functionality, users get a clear picture of their customer’s financial health and their overall exposure to risk. The system’s automated credit control functionality automatically chases overdue invoices – freeing up time and ensuring faster payment.
Web : https://solna.io/