October 27 2015
The minister for small businesses has launched a consultation to examine how the law around late payment might be changed to help SMEs. The consultation follows a February discussion paper that sought views on ways for representative bodies to challenge large companies’ payment terms and practices.
Proposals in the consultation would widen the power representative bodies (for example trade associations) currently have to legally challenge contract terms and practices deemed “grossly unfair” on behalf of their small business members.
By making it easier for disputes around contractual terms and practices to be taken to court, the courts would have an increased opportunity to decide whether terms and practices should be considered “grossly unfair”. In the longer term, this could increase the amount of case law created, which would help clarify the meaning of “grossly unfair” for the wider business community.
Samantha White, CEO of My Credit Controllers said:
“This consultation builds on other moves by the government to improve the situation for smaller businesses collecting invoices from customers. Earlier announcements have been made on public procurement, to establish a small business commissioner and a strengthened Prompt Payment Code.”
“Most of these measures have focused on so-called ‘supply chain bullying’ of small and medium sized companies by much larger companies. In our experience, though, smaller companies can also be very poor at paying their customers. With changes to the Late Payment of Commercial Debts law you can now instruct a specialist debt collection company like My Credit Controllers to chase customers for payment, and add success fees and interest to the bill that the customer has to pay.”
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