Late-pay fines pushed through

COMPANIES which fail to settle their bills on time with other businesses will be fined earlier than expected, after lobbying from Oldham MP Debbie Abrahams.

The Government confirmed last night it will bring forward the new late payment EU Directive, which introduces a minimum fixed amount of compensation for late payment and tightens the time period for payment, from March, 2013 to mid-2012.

The news was revealed to the Oldham East and Saddleworth MP, who led a 90-minute Commons debate yesterday urging action over large businesses not paying small and medium-sized firms what they owned.

She highlighted the plight of her constituents Ann and Harry Long whose plumbing and heating business, built from scratch 35 years ago, went bust due to the effect of late payments by larger contractors.

The Labour MP added: “The impact of late payment can be disastrous. During the recent recession, an estimated 4,000 businesses failed as a direct result of late payments.

“Small businesses do not have the cash-flow buffers of larger companies so, in turn, they often pay their suppliers later than they would like, and a downward spiral develops.”

Mrs Abrahams wants large businesses to sign up to a code saying they will pay on time. She told MPs: “I can announce today that Oldham Metropolitan Borough Council, which had not previously signed up, has agreed to do so.”

Business Minister Ed Davey said: “Late payment is not exclusive to any sector or to any style of business.

“Although I sympathise with those who say that this is big business abusing its power, an awful lot of payment is between small businesses. The majority of contracts that any small business has are with other small businesses. We should not say that it is just a big business problem against small businesses, because the issue is about more than bully-boy tactics.”

Mrs Abrahams launched a campaign “Be Fair, Pay On Time” after being contacted by a constituent who was a haulier and his business was threatened by late payments, in particular from large companies.

Despite his contractual terms involved payment in 30 days businesses took up 90 days to settle their account.

Speaking after the debate Mrs Long said: “I am really pleased Debbie has raised the problems in Parliament and started this debate going and I hope it will continue to make a difference to others. Although it cannot help us it can help others.”