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The Analysis Editor’s Letter


Will publicity make firms improve payment practices?


Stephen Kiely Editor, CCRMagazine stephen@ccrmagazine.co.uk


It is clear that ‘naming and shaming’ can have the effect of focussing minds in the business world, so it was good, last month, to see guidance published to help large businesses report on how quickly they pay their suppliers.


This guidance was published ahead of measures coming into force in April 2017, putting the obligation on larger companies to report, and making any failure to report a criminal offence.


Small business minister, Margot James, said: “The regulations confirm that, from April 2017, large companies and limited liability partnerships will have to publicly report twice a year on their payment practices and performance, including the average time taken to pay supplier invoices.


“The changes are part of a package to shine a spotlight on bad payment practice and lead to improved standards. This includes the appointment of the small business commissioner to support small businesses in resolving payment disputes, with the commissioner’s office expected to be up and running later in the year.” Recent findings from Bacs report that nearly half of the UK’s SMEs experience late payment, with £26.3bn owed to them in total.


Mike Cherry, national chairman at the Federation of Small Businesses, added: “The new duty to report is the centrepiece of the


It is one of the great complaints, across the credit, collections, and enforcement profession, that, as professionals and companies work so hard to abide by the guidelines set down by the regulators, then it would seem to be reasonable that those regulators should publicly acknowledge that fact


government’s transparency agenda to combat poor payment practice. We welcome this as an important tool to change a UK business culture where it is deemed acceptable to pay small firms late.


“We estimate that if payments were made promptly, 50,000 business deaths could be avoided every year, adding £2.5bn to the


March 2017


UK economy. It is now crucial that these regulations are introduced and robustly enforced with proper sanctions put in place for any large business that tries to hide its payment practices.”


As always, much of the potential devil will be in the detail, and no amount of government action will be able to replace the need for outstanding credit professionals and outstanding credit management. But, when public perception is such a powerful driver of corporate behaviour, it can only be beneficial to require clarity on payment practices.


Before I go, one final thought: we are now on the verge of the tenth anniversary of the Courts Tribunals and Enforcement Act 2007, which has done so much to standardise fees and practices in this crucial sector.


It is one of the great complaints, across the credit, collections, and enforcement profession, that, as professionals and companies work so hard to abide by the guidelines set down by the regulators, then it would seem to be reasonable that those regulators should publicly acknowledge that fact.


In the debt collection industry, so much work has been done to comply with the Financial Conduct Authority’s (FCA) rules, and now many are asking whether the FCA should be doing more to promote to consumers that these firms are properly


regulated, and so should be trusted and respected. Likewise, in the enforcement sector, creditors still do not have access to all enforcement options, despite the important changes in regulation.


Maybe it is time to look at that again? Enjoy the magazine!


www.CCRMagazine.co.uk 3


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