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Move to tackle late payment problems welcomed by insolvency expert

Leeds barrister Eleanor Temple chairs R3, the insolvency and restructuring trade body

Eleanor Temple, chair of insolvency and restructuring trade body R3.(Image: Simon Dewhurst Photography Limited)

The latest Government action to help ensure that more small businesses get their invoices paid on time has been welcomed by the Yorkshire chair of insolvency and restructuring trade body R3.

Eleanor Temple is backing the launch of a consultation focusing on giving greater powers to the Office of the Small Business Commissioner to support SMEs in resolving their late payment problems.

In the current challenging times, Ms Temple advised businesses in the region to be on the lookout for their invoices being settled later than usual, and/or outside the agreed period, as this can be one of the clearest indications of potential business distress and could potentially lead to them facing financial problems of their own in turn.

Ms Temple, a barrister at Kings Chambers in Leeds, said: "Late payment of invoices, whether deliberate or otherwise, is one of the key factors pushing businesses in Yorkshire into financial difficulties, and while a good deal of progress has been made in toughening the rules around late payment in recent years, there’s still much more to be done.

"When a company is not paid in advance for goods or services, it essentially acts as a lender for its clients, but it does not have the protection that a secured lender receives, and this can lead to cashflow problems if payments don't materialise as expected.

"This puts unnecessary strain on the finances of businesses, and can stop them investing in new services, taking on new commercial opportunities, or even having enough cash in the bank to cover their day-to-day costs, which can threaten their very viability.

“With the technologies to which all businesses have access, there is no legitimate reason why straightforward invoices can't be paid within the allotted time period, if not immediately on receipt, and we strongly welcome any moves that will help ensure more businesses meet their responsibility to pay what they owe, on time and in full.”

The new powers being proposed for the Small Business Commissioner include the ability to order businesses to pay in good time and issue fines if they do not; to compel companies to share information about how they manage their invoice systems; and the power to launch investigations into businesses where bad payment practices are suspected.