Letter to the Editor of the Times: Late Payment
The government’s poor performance on prompt payment, as highlighted by the National Audit Office (‘Whitehall ignores own rules on payments’ 8 January) could have a significant impact on the solvency of small businesses.
According to a survey of the insolvency profession, which works with struggling businesses across the country, late payment is a primary or major factor in around one-in-five corporate insolvencies.
In 2013-14, almost half of the insolvency practitioners that work on corporate insolvencies reported working on a case where late payment was a major factor.
Late payment is one of the more frustrating causes of business failure: it is avoidable and often has a disproportionate impact on smaller businesses. Although insolvency processes and insolvency practitioners can often help businesses recover from financial difficulties, it would be better if otherwise viable businesses’ futures were not put at risk in the first place.
The government has been vocal about the importance of prompt payment and it is imperative it sets the example in practice. For many small businesses that work with the government, action on prompt payment will be worth far more than words.
President of R3