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BETTER BUSINESS

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

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