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Growing MP support for late payment action

08 January 2019

Increasing support from MPs to assist members of the supply chain suffering late payment issues has been confirmed by a recent YouGov poll.

It showed that 73% of MPs approve of changes to the voluntary Prompt Payment Code recommended by the Association of Accounting Technicians (AAT).

With 16% of MPs expressing no firm views on the issue, 11% said they did not know and no votes were recorded in opposition to the proposals.

If implemented, the code will become compulsory for companies with more than 250 employees, with financial penalties for those who regularly make late payments to their supply chain.

Payment terms will also be significantly reduced from 60 to 30 days, which will be welcomed by SMEs having to deal with cash flow issues caused by late payment.

Industry commentators have previously stated that SMEs are seen as a source of free credit by some larger organisations, as they frequently have to pay their suppliers within 30 days while sometimes waiting for 90 days for payment themselves.

The new measures will be enforced by the small business commissioner.

Industry bodies have previously gained significant levels of support for actions proposed by Peter Aldous MP for cash retentions to be placed in trust accounts to protect them in the event of larger companies going out of business.

Additional attention on the issues experienced by SME members of the supply chain has been driven by the collapse of Carillion in early 2018, with millions of pounds in retention payments failing to be paid as a result and having a significant negative impact on thousands of businesses.

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