| See the Department of Trade and Industry's response to some of these comments | |
"We used to have a problem such as this on one contract - so we ceased trading with the offending company."
"It can often be inappropriate to appear hostile in the collection of debts, particularly with long standing or important clients. Legislation would help as it would normalise the practice of penalising late payments."
"We at present allow our equipment to be delivered FOC, however, we add 95.00 per machine to the invoice if not paid within 30 days."
"One of our suppliers offers an incentive of 8% of invoice value as a subsequent credit for on-time payment. I believe that this kind of incentive is a better way to resolve late payment provided the incentive does not become an extra built in 'cost' for the buyer."
"This may sound strange but it has never happened, perhaps the fact that we always pay on time is good karma."
"We feel very strongly that late payment should be penalised and we would implement a programme of adding interest. Some of our overseas customers do this already."
"I have recommended to the DTI, that large businesses (PLCs) should be required to list, in their annual accounts, all bills and creditors who have been paid late. This would be a more effective tool than billing interest, as most companies would shy away from doing this for fear of losing future business. With my suggestion newspapers would start publishing league tables of the worst payers, shaming them into improving their settlement terms."
"Some companies appear to be playing a game on how long they can delay payments - County Court / Small Claims Courts are useful."
"it will only be effective if statutory payment periods are introduced i.e. invoices must be paid in say 30 days - otherwise it is likely that large organisations will merely alter their payment periods to avoid interest payments - using their size and purchasing power as negotiating leverage."
"It will be ineffective since debtors will always fear using it as they would not wish to damage the relationship with their client / customer."
"I'm at a disadvantage because I'm a small press bookseller selling to bookshops, and I need them more than they need me. It's the way it is."
"A very pertinent subject. Late payment is the bane of many small service companies, like this one. Large companies tend to the be the worst payers and accounts departments are often disdainful (while our client contacts are embarrassed). We have had a condition of contract for about five years which allows for charging of interest on late payments. It has been exercised about eight times, when payment periods from time of invoice have exceeded about three months. We have been paid twice and twice won county court actions for non-payments + interest. On the other occasions it was ignored and we have not considered it worth pursuing. The value of having this backed by law is to raise awareness within the big companies of the problems they can cause."
"Problem of small companies needing business from large slow-payers will still remain unless the payment of interest on late payments is a legal requirement."
"Interest on late payment is pointless if you want any more business from that customer. What we really need is [an improved] court system that means if I sue I get a hearing [asap] not in 94 months time. Introduce a mega-fast track court system for businesses to use themselves etc. etc. - it's sooooooooooo easy just ask me how to do it."
"Late payments invariably indicate to us that the company is having financial difficulties. We quite often find that they have only one marketing strategy - low prices - and, in a vain effort to fund this strategy, they take as long as possible to pay ..."
"The bigger the company the worst the problem. Our major problems always occur with household name companies. The implied threat is that if you get tough with them they will not give you repeat business."
"The interest issue is a red herring, we're already making a profit, it's just that we can't get it out of some of our customers. One thing that would help is to move small company accounting onto a cash basis (like VAT for small businesses) at least then you wouldn't be hit with a tax bill on the basis of an invoice date when you didn't actually receive the money until months later."
"The subject of late payment is a critical factor when looking at business cashflow. All too often, the larger organisations feel that it is OK to delay payment - often blaming computers and cheque runs (they even know that we know that they are lying - but what can the supplier do?). We are aware of one sizeable organisation who did not pay their suppliers for one month and made 1.5M in interest alone!"
"It's the answer to a maidens prayer."
"In my particular business (freelance cartoonist & illustrator)it is normal for certain clients - ad agencies in particular - to take two or three months to pay but as this is a known factor I can live with it. Besides, this is balanced by other clients who pay almost by return of Invoice receipt."
"1 - Most of our contracts tend to be, or develop into, long term contracts, or, more often serial contracts. The damage done to the prospects of continuing relationships with those agencies that commission our work by charging interest would outweigh the short term benefits. 2 - Those that commission our work tend to come from the public sector and are subject to budget constrains that mean that charging interest would effectively increase our cost to them, leading to cost overruns and finance problems, disputes between treasury departments and commissioning departments, and possibly diminished changes of further work - in short, don't bite the hand that feeds!"
"We should adopt the German system, dealing with German companies is always a pleasure, payments are promptly made to your account, cheques are not used at all, which also cuts out various devious ways of delaying payment!"
"The best way to handle late payment is, in my view, to plan contract and invoice processes such that less payment is avoided. For instance, contracting a 21 payment limit after invoice, splitting payments up by month if a contract lasts longer than 28 months, offering discounts for early payment, etc. Invoices should always stipulate the payment terms on the invoice and, where discounts apply, make it clear that discounts are conditional upon prompt payment."
"I think that this being a statutory thing would be better, after all any business is able to add surcharges at present, but are afraid to because of upsetting larger customers, if it were statutory this should no longer be a problem."
"As you know late payment affects cash flow seriously, but non payment is even worse, what about making deliberate non payment a criminal offence, and not civil? In our eyes non payment is blatant theft, causing businesses to go under and loss of jobs, a much more serious issue than late payment."
"Although small businesses will risk upsetting clients by charging interest, I expect that the Legislation will create a general standard to which most companies will adhere."
"Most of our clients are large companies, where the charging of interest can be a bit contentious. We have got around this by introducing different levels of charging. Those clients who have a track record of early payment get a discounted rate. In some cases this has earlier payment - where it hasn't, the client has paid a rate that is 10% higher, which we're happy with."
"We have a standard client care letter which provides for interest to be paid on debts paid late. However we do not have a major problem about late payment and rarely require it to be paid especially if the debtor is genuinely finding it hard to pay our bill."
"my turnover is not enough to warrant using a factoring company and if I tried to charge interest on late payment it would be very bad PR [for] my company."
"I would say [we would] always [exercise our right], but it could easily become another contract bargaining point."
"We always take a 25% deposit with order and insist upon the balance before putting a site live and submitting to search engines."
"We already offer a prompt payment discount to all our accounts, most take this otherwise the margin they make retailing a product is not competitive. If an account becomes overdue we simply stop supplying them."
"It is a very good idea."
"Our customers are big businesses and pay according to their schedule not ours."
"Our principle problem lies in the collection of overseas debts and in particular those from EU countries and (currently) Far Eastern debts. The Single market for trading has little benefit if you can't collect the cash from recalcitrant debtors. At present it costs me £2.50 to instigate action for the collection of a UK debt and c.£1,000 to do the same in Germany (alternatively use Dunn & Bradstreet at 10-15% of the debt). Anything to cut the cost of 'leaning on' overseas debtors would increase our profitability considerably!"
"Making legislation against late payment can be detrimental to small business. Many find it difficult to obtain additional finance from the usual source (banks) to grow business. Government interference in independent business should be kept to a minimum. Government COULD set an example by improving its payment record. Charging interest could also lead customers to assume a right to pay late if we legislate in favour of charges. This would lead to poor cash flow."
"It is difficult to persuade a large company to pay. If we bring in legislation then I feel sure that they will write payment terms of up to 90 days in their contracts. If you want the contract then you are at their mercy. How can this be stopped ?? Perhaps a legislated 30 day payment period is the answer."
"The biggest problem would be enforceability. It could end up as just being a license for the legal profession to print money!!!!"
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