Business - Late-pay law isn't working
Only one in 10 small businesses have seen payment times fall since the introduction of the high-profile Late Payment Act last year, according to an extensive survey from ACCA.
The findings of the survey, which questioned 500 ACCA members in business and practice, is the clearest evidence yet that the legislation is failing to protect small businesses.
The Act allows small suppliers to charge large companies 8% interest above base rate on unpaid bills after 30 days, unless prior agreement has been reached.
But after a succession of payment disputes, involving leading companies including Rentokil Initial and House of Fraser, the legislation has come increasingly under fire from accountants and small business group suppliers.
They argue that small businesses are afraid to charge contractors 8% interest for fear of losing business.
The ACCA survey found only 8% of small businesses had experienced a reduction in payment times since the Act. All small businesses in the North West and Midlands said the Act had failed to make any impact on their organisation.
Only 22% nationally believed the Act would start to stamp out late payment.
John Davies, senior technical officer for the ACCA, said large companies knew small suppliers would not use the Act’s statutory right to interest.
A separate survey from the Credit Management Research Centre showed small firms faced an average payment delay of 20 days, compared to just nine days for large companies.