74% of Small Businesses Don’t Believe New Late Payment Legislation Has Worked

£266bn is currently inaccessible to small firms – with one in ten admitting payment terms have worsened since the Brexit vote

74% of Small Businesses Don’t Believe New Late Payment Legislation Has Worked

74% of small businesses don’t believe that late payment legislation introduced earlier this year has had any effect whatsoever– according to a report by Crossflow Payments.

The survey of 1,031 senior decision makers has revealed that the vast majority of UK small businesses believe the new guidelines, which force larger businesses to detail how they pay smaller suppliers, will continue to make no difference to their business.

It’s suggested that the new rules could actually have an opposite affect and worsen the “late payment crisis” – as larger corporates can now expand payment terms, giving the illusion they are paying on time.

It’s estimated that £266bn is currently inaccessible to small firms – with one in ten admitting payment terms have worsened since the Brexit vote.

Worryingly, 78% of those surveyed aren’t even fully aware of the new payment obligations, making it almost impossible for them to use the rules as leverage to resist pressure from corporates to extend payment terms.

With the general election less than two weeks away, it’s suggested that the new government should seek to create a cross-party group specifically designed to help tackle the problem of late payments.

Tony Duggan, Crossflow Payments CEO, said:

“The vast majority of small businesses we polled think the new payment reporting rules will do nothing to fix the late payment crisis. They are right. In fact, the new rules could make a bad situation worse.

“An unintended consequence of the rules is that large corporates are likely to respond by negotiating longer payment terms with suppliers to shift the goalposts and create the illusion that they are paying on time.

“Add to the mix difficult trading conditions thanks to Brexit and we could see Britain’s late payment crisis deepen significantly.”

 

1 Comment

  1. In fairness, the first wave of data has yet to be published and it may take time for the new rules to have an effect but the data in this latest survey points to some reasonable fears and there is no doubt that the Duty to Report is not a very well polished piece of legislation.

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