Poor payment culture continues in UK and across Europe

(2 minutes to read)

As many as 85% of UK smaller sized firms operating within European supply chains are paid late.

A recent report has revealed that despite positive steps to tackle late payments, such as the Late Payment Directive, poor payment practices continues to be an issue across Europe.

The report ‘Pay it Forward: Lessons and recommendations for Europe from the UK payment landscape’, compiled by the Federation of Small Businesses (FSB), found that the vast majority of small firms operating within European supply chains report being paid late, with 12% of SMEs having been asked for a discount in return for prompt payment.

This is despite the Directive’s rules on maximum payment terms of 60 days; the report shows that one in four (22%) small businesses report payments terms of over 60 days, while more than a third (37%) of FSB smaller suppliers say that their payment terms have increased over the last two years.

The FSB is calling on the European Commission and EU member states to introduce a number of changes aimed at strengthening existing initiatives to help change the culture on poor payment practices in the EU.

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These include:

  • Strengthen small businesses’ legal protection against lengthy payments terms by more precisely defining the term ‘grossly unfair’ as used in the Late Payment Directive
  • Issue a recommendation that all Member States introduce a duty to report on payment practices for large companies or introduce such a requirement via any reform to the Late Payment Directive
  • Appoint sector-specific ombudsmen for those sectors that are most at risk of late payments, starting with the food supply chain but also looking at sectors with high exposure to late payments such as construction

Responding to the report, FSB National Chairman, Mike Cherry, said, “Poor payment culture is a problem without borders, damaging small businesses in the UK and across Europe. It is an issue that has persisted for far too long and the time has now come to ramp up efforts to shift the cultural dial on poor payment practices in the EU.

“Even with the UK leaving the European Union next March, the reality is that the EU single market will remain the biggest market for British small firms for the foreseeable future. This is why it is vital that a culture of prompt payment flourishes across Europe.

“Whether for services or good delivered locally or cross-borders, paying on time is the moral and right thing to do – pure and simple. It is a win-win for everyone involved in the supply chain and the wider economy. When treated right and paid on time, small firms create jobs and growth that benefit us all.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.

Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, Contractor Umbrella, it means we can offer one low cost, fixed fee package at £95 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of Contractor Umbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, Contractor Umbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use Tide free of charge for the first year.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.
  • Same day payments- We offer same day payments as standard providing funds are received into our account by 9am, for no additional fee.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.