Late payments to SMEs must not be an acceptable way for big businesses to boost their own profits, according to business secretary Vince Cable, who is taking action to improve the transparency of corporate payment practices.
In a recent government consultation, the majority of respondents voted in favour of disclosure as a means of tackling late payments - and the government is now planning to require publication of payment practices by large companies.
The Prompt Payment Code will also be strengthened, with signatories held more accountable for their actions - although it is worth remembering that this is currently still a voluntary initiative.
Whether you're in business on your own, or part of a company, it's essential to protect your income - and one of the greatest areas of risk is when you extend a line of credit to a customer.
Remember, any time you carry out work, or provide goods or services, without taking payment upfront, you effectively become a creditor.
That means you need to think carefully about several different factors, for instance:
If you're a Guardian reader, you may have seen Safe Collections' collections and partnerships manager Adam Home quoted in a Guardian Professional article on May 12th.
Tim Aldred's piece looked at the case for credit control teams as a way for businesses to safeguard their cash flow and, ultimately, to stay in business by avoiding late payment.
Adam was happy to share his ideas with Tim for the piece that you can find here: "Does your business need a credit control team?" ((c) Guardian News & Media Ltd) and we're going to expand on some of those points below.
Today, Safe Collections marks it's 30th birthday and it is our pleasure to turn the blog over to our Managing Director and founder Sid Home for a few words on the company and how the landscape has changed.
Most people have heard of credit checks - even if what you immediately think of is the background check the bank runs when you apply for a credit card, loan or mortgage.
In principle, securing a credit report from Experian on a new customer is the same process, even if you are not lending them money; any goods or services provided upfront, to be paid for later, still represent a line of credit, and a risk to you if the customer fails to pay.
But how do you know who will pay in full and on time, and who is a higher credit risk?
A LONG TIME AGO, IN A GALAXY FAR, FAR AWAY
THE REBEL ALLIANCE SECURED A FAMOUS VICTORY
BLASTING THE DEATH STAR OUT OF THE SKY
WITH MOMENTS TO SPARE
BUT THEIR ACTIONS CAME AT A PRICE...
EMPIRE CONTRACTS CONTAIN A NON-PAYMENT CLAUSE
ALLOWING PAYMENT TO BE WITHHELD
IN THE EVENT OF REBEL ACTION
IT IS NO SURPRISE THAT
DARTH VADER'S FORMER HOME
CAME TO BE KNOWN AS THE DEBT STAR
A publicly accessible database of company directorships could soon become a reality, following the conclusion of a consultation by the Department for Business, Innovation and Skills.
The proposals outline plans for a central registry of company beneficial ownership information - including details of trustees, where relevant, and of individuals with ownership of more than 25% of the shares in a company, or the equivalent proportion of its voting rights.
Recently we featured an article on an individual called Phillip Buffett and his "Uber Intelligence" group of companies. This individual came to our attention when we were tasked by two freelancers to pursue unpaid invoices totalling over £10k.
It soon became apparent to us that the individual in question was a known fraudster, with a history of criminality and a penchant for defrauding individuals, businesses and even professional athletes. He was also already serving a seven year ban as a director for his previous frauds.
Unless you have the luxury of an in-house credit controller - which is something even some larger firms can't afford - you might be tempted to take a head-in-the-sand approach to chasing overdue invoices, and simply try to pretend they never happen.
Sadly they do happen, even from trusted long-term customers, and that can lead in turn to some soul-searching: Why didn't they pay? Did I do something wrong? Is there no trust in business any more?
Many small to medium-sized enterprises (SMEs) across the UK are effectively being forced to loan money to large firms interest-free, according to the Federation of Small Businesses.
In one of a pair of landmark reports issued since the beginning of the year, the FSB warns that late payments and unreasonable renegotiation of payment terms is taking money out of the hands of SMEs, and allowing it to languish for longer in the accounts of the nation's largest corporations.