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Payment code wont stop late payments claims Graydon UK

The government’s voluntary code on payment terms to encourage
the prompt payment of bills between businesses is unlikely to spark a genuine move away from late payment culture in the UK, warns credit referencing agency, Graydon UK.

The voluntary code, launched this week under the leadership of Lord
Mandelson, aims to prevent companies from reneging on agreed payment terms.

This practice is commonplace among large corporate in the UK, with Alliance
Boots and Tesco amongst the worst offenders.

The announcement follows the recent publication of research conducted by
the Forum of Private Business revealing that nearly two thirds of small firms in the UK are encountering greater difficulty managing cashflow compared with the first week of November.

Martin Williams, managing director of Graydon UKt is not convinced that the proposals will turn the tide of the late payment of suppliers in the UK, particularly in instances where small firms are the victims.

Williams says: “There’s no doubting the positive sentiment which
lies behind the Government‚s introduction of a voluntary code but it is
highly unlikely that this latest move will make a tangible difference when
it comes to helping small companies manage their cashflow.

“Long before the economic crisis really began to bare its teeth, many large
corporate were habitually using their purchasing power to squeeze their
suppliers through late payment, even though they had plenty of cash in
their coffers to pay the bills when they finally chose to.

“The difference now is that as the economic situation has worsened, even
large companies no longer have the readily available cash required to pay
bills and are failing to pay trade invoices simply because they can‚t do
so. This week‚s government announcement alone won‚t be sufficient to remedy this situation.”

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