Empowering Small Businesses: A Call to Action Against Late Payments
26th January 2024
Introduction
Late payments can pose a significant challenge for small businesses, impacting cash flow, hindering growth, and even risking insolvency. However, there’s a glimmer of hope on the horizon as the European Union (EU) takes a decisive step to address this issue head-on. The proposed reforms to strengthen the late payment directive aim to provide enhanced protection for suppliers, ensuring timely payments and shielding businesses from potential financial pitfalls.
EU’s Bold Move
In response to a call for evidence and proposals, the EU is pushing ahead with reforms that could revolutionize the landscape of late payments. The proposed regulation, expected to be adopted by March 2025 and enforced by March 2026, sets a clear deadline of 30 days from the receipt of an invoice for payment. This timeline applies provided that the goods or services have been received, with no legal extensions permissible.
Key Features of the Reforms:
- Strict Timelines: The regulation will impose a maximum payment period of 30 days, creating a more predictable and efficient payment process for suppliers.
- Compensation and Interest: Systematic enforcement of compensation and interest payments for overdue invoices will act as a powerful deterrent against late payments.
- National Enforcement Authority: The establishment of national authorities will ensure strict compliance with the regulation, adding teeth to the enforcement process.
The UK’s Potential Response
As the EU takes a pioneering stance on late payment reform, it raises the question of whether the UK government will follow suit. Observing the effectiveness of these measures could spark a domino effect, prompting other nations to adopt similar reforms. For UK businesses, this presents an opportunity to advocate for change locally.
The Role of Small Businesses
The enforcement of penalties for late payments is a pivotal shift that could reshape the attitudes of businesses toward timely payments. Small businesses, in particular, play a crucial role in driving this change. The late payment culture is a longstanding issue, and organizations like the Confederation of British Industry (CPA) have been advocating for effective deterrents like late payment compensation for years.
A Call to Action
If your small business has been plagued by late payers, now is the time to take action. Engage with industry groups, join the conversation on late payment reform, and be vocal about your experiences. The proposed EU regulations may inspire similar measures in the UK, but the collective voice of small businesses is instrumental in driving change.
Consider reaching out to local business associations, networking groups, and industry forums to share your challenges with late payments. By standing together, small businesses can create a powerful force for change, compelling governments to prioritize and implement effective reforms.
In Conclusion
Late payments have long been a thorn in the side of small businesses, but the winds of change are blowing. The EU’s commitment to strengthening the late payment directive is a positive step forward, and UK businesses can play a pivotal role in amplifying this momentum. Now is the time to raise your voice, share your experiences, and collectively work towards a business landscape where timely payments are not just a goal but a fundamental right for every small enterprise.
James Salmon, Operations Director.
Why should you become a CPA member!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!
Just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!
If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA for purchase on recourse?
CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.
Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.
Just call 020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
You put up with the PAIN – now claim the GAIN!
Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
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Check our compensation calculator to see how much your business could be owed!
Discover NOW the potential value of late payment compensation hidden in your sales ledger!