An overwhelming majority of finance directors believe the government’s late-payment legislation is failing to help small businesses.
The much-vaunted Late Payment Act, which was introduced last November, allows small companies to charge large companies 8% interest above base rate on unpaid bills after 30 days, where no prior agreement has been reached.
In this week’s Accountancy Age/Reed Accountancy Personnel The Big Question, only 25% of FDs thought late-payment legislation was helping small businesses. Over twice as many – 55% – said the late-pay legislation was not working.
Critics of the legislation argued that small suppliers are scared of alienating large contractors if they use their powers under the Act. Darren Pelham of Secure Options, the security specialist, said: ‘Payment legislation is good in theory but it’s difficult to enforce in practice. Big customers don’t see it as a valid cost and the small businesses will pay in the end.’ Nigel Fast of Calorex Heat Pumps added: ‘Nobody is sticking to the legislation.
It’s a waste of time.’ But 25% of finance directors stood by the late-payment law. ‘It’s very important for small businesses and long overdue,’ said David Quick of Office Smart Quicks.
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