ACCA, Experian, the Forum of Private Business and the Institute of Credit Management (ICM), have published a new brief guide to ensuring prompt payment, aimed at owners and managers of small businesses.
Get Paid! forms part of the four partners’ contribution to the Government’s Getting Paid on Time Day, which will see government and business support stakeholders launch a co-ordinated set of announcements aimed at small businesses and their advisers.
The guide complements previous publications, such as the ICM’s government-endorsed Managing Cashflow guides, the Forum’s Credit Control guide or Experian’s series of small business guides, by focusing on how entrepreneurs can set their businesses up to achieve prompt payment more easily. It also includes a further reading section signposting businesses to the four partners’ other resources on credit management.
Business and Enterprise Minister Mark Prisk said: 'It is hugely important that all businesses, particularly small firms, establish clear payment terms to ensure they get paid on time and successfully manage their cashflow.
'There is practical information available for businesses on getting paid that we are promoting to small firms through our Finance Fitness campaign, and this new guide published by the ACCA contains clear, helpful advice. I want small businesses to use this information and set up appropriate payment terms.
'The Government is already setting a strong example by paying 80 per cent of invoices within five days and the Prompt Payment Code is encouraging best practice. What’s more, we have secured the agreement of business representative bodies to come together and establish a prompt payment workshop, to explore these issues more fully and develop business-led solutions. We must continue to promote prompt payment to ensure our small businesses can thrive and grow'.
Philip King, Chief Executive of the ICM, says that when money is tight and cashflow is critical, prompt payment can be absolutely vital to the survival of small and medium-sized enterprises in the UK: 'SMEs can reduce the risk of late or non-payment by using automated payment methods to ensure the immediate transfer of funds; agreeing explicit payment terms in advance of a transaction; invoicing customers promptly; not giving a customer any reason to dispute an invoice; demanding interest on late payments; and perhaps even rewarding those customers who do pay promptly'.
Phil Orford, the Chief Executive of the Forum of Private Business, said: 'The late payment initiative and our Get Paid! guide are so valuable because they are designed to empower small businesses to help themselves manage credit more effectively. Taking steps to minimise the risk and impact of late payment is well within the grasp of business owners, but knowing what to do can often be a stumbling block. Together, the initiative and guide provide the information, guidance and advice entrepreneurs need to be proactive in ensuring prompt payment and peace of mind'.
Simon Streat, Managing Director of Experian’s UK&I SME business, added: 'Late payment is a pain point for many small businesses, but there are many simple changes that they can make to ease any burdens. From prioritising credit management to being more organised about invoicing and collections – small businesses will be able to strengthen themselves financially and ensure they are seen as a secure prospect both for new and existing suppliers and customers. This is vital for creating that healthy business base that we need to enable future economic growth'.
The advice provided in Get Paid! is based on the upcoming publication, Getting Paid: Lessons for, and from, SMEs – a research report by Prof. Rebecca Boden and Dr. Salima Paul, sponsored by ACCA. Prof. Boden and Dr. Paul have profiled a number of businesses large and small and interviewed key staff on their experience of late payment as both buyers and suppliers. The result is a detailed and nuanced report which ACCA will publish in its entirety in March 2012.
Manos Schizas, senior policy adviser at ACCA, said: ‘We’re proud to be sponsoring high-quality research on such a crucial topic. Late payment is a major threat to small businesses, and there’s only so much government can do to prevent it. We’re keen to ensure accountants, as trusted business partners, play their part as well'.