Government Leading By Bad Example

government payment

The issue of poor payment practices has been brought to the political forefront since the collapse of Carillion last year, as anyone familiar with the construction industry well knows.

The findings of December’s Business Select Committee inquiry underlined the effect of poor payment practices on small businesses, inhibiting growth and causing companies to fail.

This news came ahead of the government’s promise of harsher penalties for late payers, threatening to ban such firms from bidding on public contracts.

If this leads you to think that the government is leading by example on the issue, though, you’ll have to think again.

The Cabinet office has in fact failed to reach its 2015 pledge to pay 80% of invoices in 5 days and the remainder within 30 days, with the biggest drop in prompt payment coming between the 2nd and 3rd quarter of 2017.

Shadow Cabinet Minister for Business Jon Trickett, who has been very vocal with his criticism of the government’s payment habits, said of the news that, ‘This marked and long-term decline sends out a worrying signal to businesses who are looking to the Cabinet Office to provide leadership in addressing the problem of late payment.’

Among other critics, Ray O’Rourke of Laing O’Rourke called for the government to ‘settle its accounts promptly’ and lead by way of example.

Indeed, a survey conducted by the Association of Accounting Technicians (AAT) of 100 MPs found that almost 1 in 4 were in favour of a radical new approach to payment enforcement.

Meanwhile, the study found that 73% of MPs offered bipartisan support for the prompt payment code to be obligatory for those firms with more than 250 employees, for maximum payment terms for private firms to be cut in half, and for repeat offenders to face a fine.

Phil Hall, head of public affairs and policy at AAT, was also critical of the measures taken thus far by the government, including a voluntary payment code, feeble enforcement and a practically powerless Small Business Commissioner, which ‘all predictably failed to stem the scourge of late payments’.

With renewed and emphatic support for the AAT recommendations, however, he reports that it will now be ‘very difficult’ for the government to continue to drag its heels on the matter.

Regardless, it is evident that businesses cannot look to the government to lead by way of example on the issue of late payment at least for the foreseeable future.

So what can you do, as a contractor, to protect your business from death by debtors?

Speak to CRS. Our team are at hand with the skills and resources necessary to protect your livelihood; through a number of bespoke debt services, ranging from recoveries to credit control, we are here to help.

Call 0114 236 1884 to find out more.

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