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BETTER BUSINESS

Of the SBC, Langley says it “offers Legal options
lots of useful advice for small busi- All of this leaves the troubled
nesses including tips on how to com- printer with only one route – going
municate with slow paying to law. But apart from the expense it
customers, and practical guidance”. may not be all it’s cracked up to be.
She notes that its website also links to Statistics that Langley cites, for the
the Prompt Payment Code, “where a period April to June 2023, show that
supplier can check to see if their cus- on average County Court claims
tomer has signed up to a voluntary
code of practice for prompt pay- were taking between 52.3 weeks and
ment”. 78.2 weeks from the date of issue of
However, in reality the SBC is the claim to the date of trial.
toothless; as the government’s web- But beyond the delay, she says that
site says, it can make “non-binding “the costs associated with taking
recommendations on how the par- court action are variable depending
ties should resolve their disputes”. upon the amount of the debt, and
The Association of Accounting whether interim applications are
Technicians (AAT), an accounting necessary.” She adds that court fees
body, has since 2016 been calling for can be added to a claim, but “legal
the SBC to be given the power to fees will not be recoverable for small
impose financial penalties to those claims”.
who persistently fail to pay 95% of And while she says that “it’s not
invoices within 30 days. This would usually difficult to prove that a debt is
give it much greater influence when owed, getting a judgment in your
investigating complaints. favour does not automatically guar-
Rush isn’t impressed and considers antee payment”. In other words,
the figures for the SBC poor: “Its creditors may still need to take
2022-23 Annual Report says that it enforcement action by instructing
had [just] 387 requests for assistance. bailiffs, or where the debtor is a lim-
In its defence, it has quite a narrow ited company, considering winding-
remit and so is not always in a posi-
tion to help – and where it does up proceedings, all of which add both
investigate, it cannot apply any sanc- cost and time to the process.
lending them money, and if they had to borrow that money from some- Also, and this is a concern, Langley
where else, then they would be paying interest.” tions other than naming and sham- has seen customers who know the
Rush thinks the same, noting that interest at the Bank of England base ing the business which has paid late.” rules and may be serial non-payers
rate plus 8% and if no credit period has been agreed, payments will be He notes too that “smaller businesses and so “use the legal process to con-
regarded as late after 30 days, quite a generous remedy. are likely to be disappointed with the tinue to delay payment whilst the
He does emphasise though that “it is possible to oust the statutory right to government’s decision to drop pro-
late payment if the contract contains ‘some other substantial remedy’ such posals to give the SBC powers to move on to a new supplier, and so the
impose fines for late payment.”
as an express provision for lower rates of interest on late payment and/or And of course, there is another threat of legal action does not always
sometimes longer credit terms. problem faced by the SBC – a recur- produce results.”
“So, if we ask, ‘has it been successful in ensuring that suppliers benefit rent theme according to Rush – in Rush turns to the government’s
from 30-day payment periods and a generous remedy for late payment relation to attempts to tackle late Money Claim Online service which
which they are actually prepared to use?’ The answer is in most cases, no, it payment. is available for claims under
hasn’t.” He’s referring to the fact that £100,000. He says that “it’s relatively
In fact, Rush considers that Payment Practices and Performance “small suppliers typically don’t want straightforward and in theory could
Regulations 2017 have been more successful as they’ve nudged larger busi- to alienate customers, so they are proceed fairly quickly to a judgment
nesses into paying more invoices on time. only likely to pursue a complaint if if, for example, the customer simply
Moving on, 2017 brought the Small Business Commissioner (SBC), an they think their relationship with the fails to respond”. He too notes the
independent public body set up by the government under the Enterprise Act customer is irretrievably broken.” difficulties surrounding a judgment,
2016 to tackle late payment and unfavourable payment practices in the pri- It’s relevant here to state that from
vate sector. April 2024 companies seeking gov- but says that “threats of going to law
The SBC seeks to provide general advice and information, handle com- ernment contracts exceeding £5m are sometimes sufficient to get cus-
plaints about payment issues and direct small businesses to existing dispute must demonstrate prompt invoice tomers to pay up. But if a customer
resolution services where appropriate. Its website claims that over £8m in payment within an average of 55 has just run out of money, they’re
unpaid invoices have been recovered under its watch. days. unlikely to work”.

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