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Prompt payment is vital for small and medium-sized enterprises.

The Government and industry is calling on businesses and public organisations to pay suppliers on time and for small firms to pursue those who put them at risk by delaying.

Business Minister Mark Prisk announced a new working group of business representatives would examine issues behind late payment, while the Association of Chartered Certified Accountants (ACCA) published a new guide, Get Paid!, on prompt payment. It contains valuable lessons from small businesses such as advice on invoicing and developing a well-defined credit policy.

Prompt payment is vital for small and medium-sized enterprises (SMEs), with many firms not able to survive the cashflow problems that late payments create. Advice and guidance for small businesses to help them make sure they are paid on time and can seek redress if they are not is part of the Finance Fitness campaign, which sees government and businesses working together to help SMEs.

The Government is encouraging SMEs to:

• Proactively agree payment terms before delivering orders.
• Sign-up to the Government’s Prompt Payment Code, run by the Institute for Credit Management (ICM) and representing an estimated 60% of supply chain value in the UK.
• Raise complaints over late payment from Code signatories and use legislation already in place to help companies pursue late payers.
• Use electronic invoicing where possible, automating process and adding instant transfer of the invoice and instant verification from the customer that the invoice has been received.

Getting paid on time remains a problem for many SMEs and the Government wants to ensure they are aware of the advice and guidance they can use to combat this. The Prompt Payment Code, run by the ICM, promotes best practice between organisations and their suppliers. Businesses and organisations that sign up to the Code commit to paying their suppliers within clearly defined terms, and also commit to ensuring there is a proper process for dealing with any issues that may arise.

Business and Enterprise Minister Mark Prisk said: “It is hugely important that all businesses, particularly small firms, establish clear payment terms to ensure they get paid on time and successfully manage their cashflow.

Small firms can get more advice and information on securing prompt payment at BusinessLink.gov.uk and from the Cash Management guides developed by the Institute of Credit Management, in association with BIS.

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