Political parties’ plans to tackle late payments

New analysis by Atradius has reviewed the political parties’ key business-related pledges with the Conservatives, Labour and Liberal Democrats having all made promises to tackle the late payments crisis harming businesses.

Labour says it would stamp out the late payment of invoices via new legislation to force large businesses to reveal their payment practices. The Conservatives would improve enforcement of the prompt payment code, a voluntary code of practice for businesses, designed to encourage supplier payment in 30 to 60 days. The Liberal Democrats would require all government agencies and contractors and companies with more than 250 employees to sign up to the prompt payment code, making it enforceable.

Ruby Hartery, senior underwriter and insolvency expert at Atradius UK, said “Nearly two-thirds of all B2B sales are transacted on credit in the UK, and Atradius data shows late payments currently affect 40% of B2B sales across all business sectors. The UK consumer durables industry is hardest hit, with payments being collected on average two weeks past the due date, causing cashflow imbalances.”

“The impact of late and long payments on companies can’t be overstated, contributing to an estimated 50,000 UK business closures each year. The anxiety they cause also takes a huge toll on business owners’ mental health.

“Naming and shaming late-paying businesses, as Labour has proposed, would put pressure on them to pay their invoices on time. We haven’t yet got details on how this would work, or whether it would be accompanied by strict enforcement and penalties for companies that don’t comply.

“Even with these proposed measures, which would be a step in the right direction, we wouldn’t expect an immediate end to the late payment’s crisis. So, we recommend firms of any size protect themselves with trade credit insurance, enabling them to trade with confidence.”