FDs slate late pay legislation
The Late Payment Act has been condemned as useless and impractical by finance directors.
As the government moves to introduce late payment compensation, three-out-of-five FDs in this week’s Accountancy Age/ Reed Accountancy Personnel Big Question survey said the legislation had not improved the financial health of SMEs. A quarter remained neutral and less than one in five said it made life easier.
The current act gives businesses the right to claim interest on late payment, a measure many believe is unworkable.
Extra late payment compensation could be added to the legislation as a result of a European Union directive. A consultation on its introduction in the UK, run by the government’s Small Business Service, closes tomorrow.
The survey of more than 400 FDs found those who did find the act useful are sceptical about its implementation. Many believe big businesses are too powerful and the smaller ones are afraid of losing customers by demanding interest. One said: ‘The act is useless. Threats mean people will take their business elsewhere.’
The findings come as fears of recession, which could increase late payments, hit UK business. Late payments cause 10,000 businesses a year to go under.
Chancellor Gordon Brown, speaking this week at the European Bank of Reconstruction and Development, insisted the UK was well-placed to weather the global turmoil, but acknowledged the need to remain ‘vigilant’.
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