A host of organisations have written to the government to call for a plan of action over late payment.

Bodies including the Federation of Small Business (FSB) and BPIF have addressed business minister Mark Prisk, claiming that late payment is a growing problem that "decimates" small businesses' cash flow and is hampering economic recovery.

 
BPIF chief executive Kathy Woodward said: "The BPIF is pleased to support this campaign to tackle the issue of late payment of commercial debts. One of the calls for action on our lobbying brief Priorities for Print is for government to legislate to ensure that companies and public bodies cannot enhance their own cash flow by imposing unreasonably drawn-out payment terms on their suppliers.

"However commercial considerations can often mean that many small print suppliers do not seek to enforce their right to interest on late payment, and of course in order to secure business they can often find themselves obliged to agree longer credit terms.

"It is therefore particularly important that any new legislation prevents suppliers being coerced into agreeing to vary payment terms against their will, and this is one of the key points made in the letter to the minister."

Measures called for include clarification on the UK start date for the EU Late Payment Directive, which will make 30-day payment terms mandatory in the absence of any specifically agreed payment terms.

The organisations have also called for flexible implementation though because of the "domino effect" small businesses face due to slow-paying large businesses, while facing suppliers' demands for 30-day payment.

Other demands include a clamp down on large companies taking ‘prompt payment discounts’ and imposing retrospective changes to payment terms and conditions, and a pledge from government to continue with the UK’s public sector 10-day and five-day payment initiatives.

It has called for a national league of local authority payers, including incentives, to encourage good payment performance.

The letter also references the Prompt Payment Code, which it believes should be an opt-out rather than an opt-in scheme.

FSB chief executive Phil Orford said: "There is mounting pressure on the government to crack down on the growing corporate late payment culture, which is already a huge problem for small businesses and is in danger of becoming endemic.

"Late payment and enforced retrospective changes to payment terms and conditions force firms out of business. It is time to tackle the problem once and for all so that prompt payment becomes the norm, unless there are good, justifiable reasons otherwise."

Other organisations that have signed the letter include Graydon UK, Lloyds TSB Bank, the Asian Business Federation, the Brewing, Food and Beverage Industry Suppliers Association; the British Home Enhancement Trade Association, the Business Woman’s Network, the Federation of Master Builders and the Federation of Petroleum Suppliers.