Late-payment battle goes to the Commons

GOVERNMENT will today come under pressure from Oldham MP Debbie Abrahams to introduce late-payment fees to help small and medium-sized businesses stay afloat.

As part of the Be Fair — Pay on Time campaign launched by the Oldham East and Saddleworth MP, she will lead a 90-minute Commons debate urging companies to settle their accounts on time.

She said: “Since being approached by several of my constituents telling me how the issue of late payments by larger companies has been crippling their businesses I have been working to raise the profile of this issue locally and nationally.

“So I am really hopeful that this debate will open people’s eyes to an issue that is affecting thousands of small and medium businesses (SMEs) across the UK.

“I am amazed at the level of agreement and support there is for my campaign in private but publicly SMEs are just too afraid to say anything for fear of reprisals.

“I have spoken to the Forum of Private Businesses, the Federation of Small Businesses, the Chamber of Commerce and many other SME organisations and all say that late payment is the ‘elephant in the room’ for them during this difficult economic period.

“I will be appealing to MPs from all parties today to support my campaign and for the Government to grasp the nettle and do something about the plight of these firms.

“As the Government has said they are the backbone of our economy, it must stop this practice of late payments that is so damaging to SMEs individually and to the economy as a whole.”

Labour wants the Government to bring forward the new late-payment EU Directive which introduces a minimum fixed amount of compensation for late payments and tightens the time periods for payment from March, 2013.

In addition, the Labour MP will urge Government to ensure that all its departments are better at meeting the five-day payment target and have effective monitoring and reporting procedures in place.

Mrs Abrahams will also call for large businesses to sign up to the prompt payment code.

John Walker, chairman of the Federation of Small Businesses, said: “Late payment is one of the biggest bug bears for small businesses and an issue that can potentially put a firm out of business.

“Our survey work has shown that almost three quarters of businesses have been paid late in the preceding 12 months — and for many of them, it has had an adverse effect on their cash-flow meaning they have then paid late.

“This is a practice that must stop.”


‘Immoral’ big firms put small companies out of business
ATTENDING the debate will be Ann Long, one of Debbie Abrahams’s constituents, who knows only too well the effect late payments can have on an SME

IN July this year the plumbing and heating company, Harry Long Ltd, Ann Long and her husband, Harry, built up from scratch 35 years ago went into administration mainly due to the effect of late payments by larger contractors.

She said: “Being at the debate in person to hear what Debbie and other MPs have to say about the issue of late payments is something I feel passionately about following the collapse of our family business.

“I can say from our own bitter experience how larger companies have the buying power to stretch out the time it takes them to pay their bills to smaller companies like ours.

“This is especially damaging during a recession, or when the economy is as fragile as it is now.

“For most of our 35 years in the business we worked with many good local companies who paid on time and, like us, held strong, honest values paying suppliers on time. A lot of this was to do with our client base being companies like ours; local SMEs who care.

“But when the recession hit, our regular clients’ work began to dry up and the only companies who seemed to have work were the larger companies, so we had to try and win work with them.

“The Government should be doing more to ensure that these large companies pay on time. Sub-contractors are being crippled by this and we hear nearly every week of another SME we know that has gone under. We don’t have legal departments and in most cases can’t even put up a fight.

“If the Government is not careful and don’t look at this issue of late payments they are going to lose everything that is good about our construction industry. I cannot see how this isn’t affecting our economy.

“At the end of the day all we needed was to be paid on time for the work we’d done but it seems for some companies their profits were more important than whether their supplier goes under.

“It’s astonishing what small companies like ours have to put up with in our industry. Even having to tender for contracts on auction sites. It’s immoral.”