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Late payments: do Prompt Payment Codes work?

Unpaid invoices can kill your business

We’ve all suffered from late payers. It’s part of the job.

What do you do when late payers threaten your business?

Tax Donut recently published a blog post highlighting the reluctance – putting it politely – of big firms to sign up to the Prompt Payment Code.

60 of the top 75 FTSE 100 firms didn’t even bother to reply to the Pay on Time campaign’s request. That’s just rude.

Micro businesses are much less likely to have big firms as clients, but we are much more at risk if we do.

In addition, the bad behaviour of the big firms sets a culture of paying late – or not at all – is ok and standard business practice.

Let me be clear, it is NOT ok.

It is not ok to hold another company to ransom while you choose to pay – or not pay – at your convenience. It is abuse of power.

Does a Prompt Payment Code work?

I am in favour of such codes. I think they’re A Good Thing. It’s pressure to do the legal right thing.

However, whether businesses actually get paid sooner is another issue.

I have contacts who have unpaid invoices with firms who have signed up to a pay on time code. Some of the payments were seriously late, regularly late, and threatening the business.

So while the pressure to agree to behaving legally and properly is a wonderful thing, please don’t change your cash flow arrangements from the assumption you will get paid faster.

Just my opinion of course.

 

What do you think? Tell me in the comments and please tweet and share.

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