Purbeck Insurance Services responds to late payment legislation

The UK government has confirmed a package of new measures to support small businesses and the self-employed by tackling the scourge of late payments.  This includes new legislation requiring all large businesses to include payment reporting in their annual reports.

Small business champion, Todd Davison, MD of Purbeck Insurance Services, a provider of personal guarantee insurance to small business owners and directors says: “The late payment issue is accelerating so Labour really does need to grab the bull by the horns.

“The legislation might provide more transparency for small businesses when they engage with potential future customers but I am not sure many small businesses would walk away from a lucrative contract on that basis.

“Brand reputation matters though. Forcing big businesses to report publicly on their payment practices may provide the catalyst for some of the worst payers to sharpen up their act or risk reputational damage and loss of custom.

“Late payment creates a vicious circle as businesses are paid late and therefore pay their own suppliers late. It significantly impacts cash flow driving some firms to seek out funding or loans for working capital to keep themselves afloat.  This has never been right or fair.

“In our latest analysis of personal guarantee backed loans, 31% of loans were secured for working capital – this has been the main reason for securing finance and applying for Personal Guarantee Insurance for the past three years, since we began collecting the data.

“Big firms need to find more ethical ways of managing their own cashflows rather than taking the easy route of delaying payment to the time it suits them.  Making payment practices public is a step in the right direction to solve this issue for good.”