• Follow us

Internet

What can policy makers & tech companies do to help fix the late payment culture?

In his Spring Statement (13th March 2019) the Chancellor Philip Hammond announced the first steps to tackle the destructive impact of the late payment culture on the UK’s freelancers/sole traders and SMEs. The Chancellor said that he will require company audit committees to review payment practices and report on them in their annual accounts.

The collapse of the construction company Carillion acted as a stark warning about the importance for the economy to make sure that SMEs are paid on time by larger companies. Carillion, which was one of the biggest suppliers to the Government, were in essence using their supply chain as a line of credit, where it estimated that £750 million was owed to a range of small businesses and freelancers.

Small companies have always found it hard to get paid on time from the larger businesses they engage with. However, it is promising that there is now enhanced awareness amongst policy makers of how systematic the issue of late payments is. This is best typified by a new reporting regime for larger companies which forces them to reveal the number of days it takes to pay suppliers.

That said, policy makers can’t be expected to solve the problem exclusively, and collaboration is required from SMEs and stakeholders who represent their interests. The Federation of Small Businesses (FSB) has been highlighting the importance of late payments for many years and is presently campaigning for specific policy interventions to solve the problem. 

Technology can also offer a helping hand to solve the underlying issue. Aggregate data sets from cloud technology companies can reveal payment trend insights which can be used both to lobby government, as well providing SME trade bodies with a new data point to come up with their own policy suggestions.

Stakeholders should also play a role in communicating to SMEs technology related solutions which they can use to solve late payments themselves. One such suggestion is to educate them about the importance of credit scores, and how they can use them to manage their own debtors’ books and reduce the instances of late payments. 

Government efforts

Late payments are most definitely on the Government’s agenda. In 2017 Paul Uppal was appointed as the first Small Business Commissioner. His remit is to promote responsible payment practices, alongside helping to mediate specific disputes between large and small companies.

Additionally, the “Reporting on Payment Practices and Performance Regulations” were introduced. This requires large companies to report twice a year on their payment practices and policies.

Whilst these efforts by the Government are encouraging, fewer than 3500 companies have had to report on their payment practices. In turn, the powers of the Small Business Commissioner are limited with no ability to issue fines, and it was reported in June 2018 that just two cases have been investigated to date.

In time it is possible that these measures may help solve the late payment epidemic. However, in the interim trade bodies representing the interests of SMEs are lobbying for policy makers to make interventions which go even further.

FSB action

Mike Cherry, the FSB’s national chairman has taken direct action by writing to the chairs and CEOs of all FTSE 100 companies to challenge the late payment culture head on.

From their own independent research, the FSB (an organisation which exists to support the 4.8 million self-employed people in the UK) found that 84 per cent of small businesses have been paid late by big companies.

In order to hasten change Cherry is pushing for large companies to be forced to appoint a non-executive director, who would take responsibility for ensuring responsible supply chain practices, to take charge of payment best practice.

Upon the announcement in May 2018 Cherry said:

“We can only end the late payments crisis and poor payment practices when we see a fundamental cultural shift in the boardrooms of big business, with those at the very top showing a willingness to address the issue and be accountable for their payment practices.”

The FSB is also trying to persuade the Government to force their suppliers to pay their bills on time, in order to encourage more SMEs to bid for their contracts. This would help the Government reach their target of small businesses winning 33 per cent of central government spending by 2022. This is a timely issue, with recent figures revealing that this dropped from 24 per cent to 22.5 per cent over the last 12 months.

Technology can play a part, too

Technology is also starting to play a prominent role in helping to address late payments. Cloud accounting and invoicing platforms, such as Xero, Sage One, Quickbooks, and Solna are now used by hundreds of thousands of small businesses in the UK.

These platforms carry aggregate real time data on a large, and growing, subsection of the SME economy. This data can be used to reveal intelligence on payment trends across all company users, as well as being able to drill down on a sector specific basis.

Xero is already beginning to explore such use of its data, and recently introduced the Small Business Insights dashboard. This is updated monthly, and has an ambition to give policy and industry decision makers real time insights into the health of small businesses.

Information on payments is a central tenet, with the Xero Dashboard revealing  that over half of invoices with 30day payment terms were paid late in 2017.

The other cloud accounting platforms have the capability to provide similar insights, and disseminating these late payments trends will put more pressure on policy makers as well as being able to provide rich data sets to support future SME policies.

Credit scores

The requirement for payment reporting only applies to companies which exceed two out of three of the following criteria: turnover of £36 million; balance sheet total of £18 million; 250 employees. Whilst this makes it possible to look up the credit worthiness of larger companies, the vast majority do not have to report.

However, SME owners can take action head-on by monitoring the credit scores of new and potential customers. A credit score is a numerical indicator of a company’s financial health and their ability to service debt. Historically, they have tended to be used by larger companies to monitor their supply chain but are now also becoming increasingly marketed to small business owners.

Keeping tabs on the credit score of customers allows businesses to respond to adverse changes in the circumstances of clients by chasing customers for payment or changing payment terms on future related contracts.

For example, invoicing platform, Solna, blends credit score monitoring with automated invoicing. This allows users to access payment insights from their customers through a combination of credit score data as well as intelligence from open rates of invoices.

The accessibility of credit scores creates an opportunity for both trade bodies and policy makers to raise awareness of their importance in reducing late payments and helping SMEs make informed choices about who to work with and what terms to offer.

There isn’t likely to be a silver bullet to solve late payments anytime soon but the collective efforts of policy makers, SME stakeholders and the smart use of technology can help move the needle on improving the fortunes of the millions of business owners who make a vital contribution to the economy.

Inna Kaushan, CEO and founder, SolnaImage Credit: Centtrip

Read More



Leave A Comment

More News

TechRadar: Internet news

The best 2-in-1 laptop 2019: find the best 2019-05-21 18:58:42Alongside the impressive HP Spectre x360 15T (2019), these are the best 2-in-1 laptops around.

Vizio’s budget V-Series will offer 4K and Dolby 2019-05-21 18:17:56Vizio’s stacked 2019 TV lineup includes a 3,000-nit TV and several ultra-budget Dolby Vision screens.

Apple now accepts 2018 MacBooks into its keyboard 2019-05-21 18:15:13Apple has expanded its keyboard repair program to cover all MacBooks with Butterfly keyboards.

Digital transformation could be causing security risk 2019-05-21 17:50:32A new report from Thales and IDC has shed light on a growing security gap among European businesses.

Google Pixelbook 2: what we want to see 2019-05-21 17:40:10Here’s everything we want to see from the Google Pixelbook 2

The best student laptops: all the best options 2019-05-21 17:07:31The best laptops for college students – everything from Chromebooks to the new Dell XPS 13.

Sharks vs Blues NHL live stream: how to 2019-05-21 17:03:33Who will get a shot at the Stanley Cup? We’ll show you how to live stream the NHL San Jose Sharks vs St. Louis Blues action from anywhere.

Why you should care about the 2019 VW 2019-05-21 16:04:13Far from taking control out of your hands, smart optimization could make tomorrow's cars a joy to drive.

DDoS attacks soar after long period of decline 2019-05-21 15:33:47New research from Kaspersky Lab has revealed that new DdoS-for-Hire websites have reignited cybercriminals' interest in DDoS attacks.

Honor 20 vs Honor 10 2019-05-21 15:26:42The Honor 20 is the brand's latest affordable flagship, but how different is it really to the Honor 10?

Huawei Android ban: Time for Honor to rise 2019-05-21 15:02:51Honor might be Huawei's secret weapon

Opera jumps into gaming with Opera GX browser 2019-05-21 14:59:15Opera has announced an upcoming 'gaming' browser called Opera GX, but specified no features.

Latest ITProPortal news

The need for next-generation data management: Six key 2019-05-22 05:00:46How to solve the challenges that the explosion of data will pose healthcare.

Micro conversions: Why marketers are taking small steps 2019-05-22 04:30:29The digital world has created a multitude of touch points, signals and clues for marketers to unlock.

The future of banking 2019-05-22 04:04:57Transformative business model evolution within financial services.

Avoiding the pitfalls of eCommerce replatforming 2019-05-22 04:00:16Here's how to carry out a successful eCommerce replatforming project.

What is Industry 4.0? Everything you need to 2019-05-21 10:44:19Industry 4.0 - what's new 22/04 - FEATURE - Andy Coussins/Epicor Software - Six skills need ...

UK businesses prioritise financial loss over consumer trust 2019-05-21 08:00:10Some risk is worth more than the other.

US "underestimates" Huawei, says company founder 2019-05-21 07:30:31Its 5G technology is something ‘no-one could catch up to’, apparently.

Isn’t email supposed to be dead? 2019-05-21 07:00:35One place email certainly isn’t headed? Extinction.

Drone makers could be the next Chinese firms 2019-05-21 07:00:28Any Chinese company that creates data could be at risk.

Sony picked Microsoft cloud deal after AWS talks 2019-05-21 06:30:14Sony and Amazon couldn't agree on pricing.

Google Glass 2 enterprise version launches 2019-05-21 06:00:14New edition will set you back $999.

Turning up the volume on voice commerce 2019-05-21 06:00:12How voice commerce will transform retail - and how.

Dev Pro

Google Glass Gets New Life on Factory Floor 2019-05-20 11:49:00Alphabet, along with Microsoft Corp. and a slew of startups, are bringing so-called wearables back as part of a push to make warehouses and manufactur

Google Pulls Android From Huawei, Deals Blow to 2019-05-19 22:11:00Alphabet Inc.’s Google will cut off the supply of hardware and some software services to Huawei. That will severely curtail the sale of Huawei s

Windows 10 (19H1) Build Tracker for PCs 2019-05-19 14:30:00We track the history of the development builds released for the 19H1 Feature Update for Windows 10 which will be the seventh overall for Microsoft's

DIY Open Source NAS: How to Install FreeNAS 2019-05-19 12:04:00Open source NAS isn’t appropriate for every use case, but it can be ideal for lab deployments, smaller workgroups or active archive data.

Migrating Office 365 in an M&A World 2019-05-17 17:25:00Date: Thursday, June 13, 2019 Time: 02:00 PM Eastern Daylight Time Duration: 1 hour With 1 in 5 organizations today using some or all of Office 365,

What’s New in Windows Server 2019? 2019-05-17 16:36:00Date: Tuesday, June 11, 2019 Time: 12:00 PM Eastern Daylight Time Duration: 1 hour Windows Server provides the foundation for most businesses IT infr

Video: Internet of Things World 2019 2019-05-17 15:30:00Internet of Things World ran this week in Santa Clara. This video series looks at the highlights from the three-day conference.

Turning Storage into Action: Uncover Business Value in 2019-05-17 14:28:00Date: Tuesday, June 25, 2019 Time: 12:00 PM Eastern Daylight Time Duration: 1 hour What’s the value of backup? Many IT pros – especially

Understand the end customer value of a Cohesity 2019-05-17 13:48:00Date: Tuesday, June 25, 2019 Time: 02:00 PM Eastern Daylight Time Duration: 1 hour Brought to you by The cloud era has shaped many industries an

HPE Agrees to Buy Supercomputer Maker Cray for 2019-05-17 12:29:00The deal will help HP Enterprise strengthen its position against International Business Machines Corp.

New in AI: Smarter Searches, More Languages Learned 2019-05-17 10:30:00Microsoft open-sources an algorithm to help AI perform better searches, while Amazon is teaching its AI how to switch languages in training exercises.

Windows Server vNext (19H1) Build Tracker 2019-05-17 04:35:00Microsoft has kicked off the development process for the next update to Windows Server under the code name 19H1 and as we have done in the past, we ar

TechCrunch » Enterprise

Robin picks up $20 million Series B to 2019-05-20 08:37:24Robin Powered, a startup looking to help offices run better, has today announced the close of a $20 million Series B funding. The round was led by Tol

Wagestream closes $51M Series A to plug the 2019-05-20 08:35:08Getting your work wages on a monthly (not weekly nor biweekly) basis has become a more widespread trend as the price of running payrolls has gone up,

Under the hood on Zoom’s IPO, with founder 2019-05-17 14:00:22Extra Crunch offers members the opportunity to tune into conference calls led and moderated by the TechCrunch writers you read every day. This week, T

HPE is buying Cray for $1.3 billion 2019-05-17 09:50:35HPE announced it was buying Cray for $1.3 billion, giving it access to the company’s high-performance computing portfolio, and perhaps a foothol

Health at Scale lands $16M Series A to 2019-05-17 09:00:53Health at Scale, a startup with founders who have both medical and engineering expertise, wants to bring machine learning to bear on healthcare treatm

Unveiling its latest cohort, Alchemist announces $4 million 2019-05-16 11:30:08The enterprise software and services-focused accelerator Alchemist has raised $4 million in fresh financing from investors BASF and the Qatar Developm

SugarCRM moves into marketing automation with Salesfusion acquisition 2019-05-16 10:06:35SugarCRM announced today that it has acquired Atlanta-based Salesfusion to help build out the marketing automation side of its business. The deal clos

OpenFin raises $17 million for its OS for 2019-05-16 09:01:51OpenFin, the company looking to provide the operating system for the financial services industry, has raised $17 million in funding through a Series C

VMware acquires Bitnami to deliver packaged applications anywhere 2019-05-15 12:52:01VMware announced today that it’s acquiring Bitnami, the package application company that was a member of the Y Combinator Winter 2013 class. The

Tealium, a big data platform for structuring disparate 2019-05-15 11:11:57The average enterprise today uses about 90 different software packages, with between 30-40 of them touching customers directly or indirectly. The data

Solo.io wants to bring order to service meshes 2019-05-15 11:05:07As containers and microservices have proliferated, a new kind of tool called the service mesh has developed to help manage and understand interactions

Egnyte brings native G Suite file support to 2019-05-15 09:10:55Egnyte announced today that customers can now store G Suite files inside its storage, security and governance platform. This builds on the support the

Next INpact – Actualités

⭐ #LeBrief : scission Facebook, Pixel 3a démonté, 2019-05-10 03:53:37C'est l'heure de #LeBrief, notre bilan de l'actualité dans le domaine des nouvelles technologies. Il contient toutes les informati

⭐ Le récap' des bons plans du moment, 2019-05-08 07:37:29Cette semaine, Next-INpact fête ses 16 ans, entre deux parts de gâteau, l'équipe s'est occupée de l'automatisation d

Bilan Q1 et Odyssée 2024 de Free : 2019-05-07 04:14:07Au premier trimestre, les revenus d'Iliad augmentent doucement, tandis que le nombre d'abonnés est encore en baisse. Après avoir&

⭐ #LeBrief : failles critiques Cisco, comparateur d'auto-écoles, noyau 2019-05-06 03:56:36C'est l'heure de #LeBrief, notre bilan de l'actualité dans le domaine des nouvelles technologies. Il contient toutes les informati

Monaco Extended, le virage numérique du Rocher 2019-05-03 08:46:04L'État ville étriqué sur une superficie riquiqui a décidé de passer à la vitesse supérieure sur le t

Vie privée, chiffrement, Messenger léger, groupes, achats en 2019-05-02 11:47:492019, Mark Zuckerberg se présente désormais comme un grand défenseur de la vie privée avec quelques promesses à la

⚡ Service Mon activité : Google permet enfin 2019-05-02 02:00:50Attendue depuis des années, la fonctionnalité permettant de demander la suppression automatique des données que Google réc

⭐ Le récap' des bons plans du moment, 2019-05-01 07:37:00Cette semaine, nous vous avons fait découvrir Chocolatey un logiciel permettant de gérer vos logiciels et vos mises à jour, 

« Carte d’identité de l’accès » : les 2019-04-29 10:41:14Le régulateur des télécoms veut que les box des FAI de plus d'un million d'abonnés disposent d'une API permettant

⚡ Docker Hub piraté : des « données sensibles » de 190 2019-04-29 02:18:08Docker a été piraté jeudi dernier. Les noms d'utilisateur, empreintes de mots de passe et jetons d'authenti


Disclaimer and Notice:WorldProNews.com is not responsible of these news or any information published on this website.