It’s no surprise that late payments continue to dominate the corporate landscape in the U.K., in the aftermath of the Carillion collapse at the beginning of this year. To that end, U.K. politicians from both sides of the aisle have backed a series of proposals that seek to curtail late payments across supply chains in the country.
The proposals come from the Association of Accounting Technicians (AAT), and the trio of measures would, as reported by Building, change the nation’s Prompt Payment Code. The revamped code would be mandatory for companies that have more than 250 staff members. That would widen the net of companies covered by the code. Of the top 10 contractors in the country, only eight have signed on, and the two that have not are Laing O’ Rourke and Taylor Wimpey.
Further recommendations state that payment terms be halved from a minimum of 60 days to 30 days — a shortening of time comes as figures shown by the industry denote an average of 53 days to pay from these large payment contractors. Other recommendations advocate setting up a “financial penalty regime” that would be under the purview of the small business commissioner, which would levy penalties on late payers. In terms of redress as it stands now, subcontractors can take alleged late payers to court for arbitration.
According to the Building report, Sir Graham Brady MP said, “Prompt payment is essential for most businesses, but particularly [SMBs that] often suffer real problems when not paid in a reasonable time frame. The reforms suggested by AAT appear to be a good solution to this long-standing problem.”
Calls for reform are being accepted until Nov. 29.
Late Payments In New Zealand
Elsewhere, in New Zealand, data from Xero’s Small Business Insights found that, on average, smaller firms across the country were paid late more than eight days in August. However, that data could show late terms of as many as 10 days for the Hawke’s Bay region.
As quoted by The New Zealand Herald, the Bay Chamber of Commerce’s CEO Wayne Walford stated that “we find that companies extend the payment to the end of the month or later, despite [having] clear terms of credit for the 20th of the month after. Organizations that manage this well are those [with] staff dedicated to follow-up as soon as the credit term deadline is reached and payment is not received. In some cases, having the confidence to discuss terms to assist cash flow is worth having, but not if the company you are paying has a very tight cash flow regime.”
The data comes in the wake of the collapse of a Hastings building company, which was liquidated earlier in the year, and where there had been issues with cash flow, said the publication.
Tesla And Late Payments
In terms of individual company impact, a boost in Tesla’s accounts receivable has gained the notice of analysts. The accounts receivable line nearly doubled in the latest quarter to $1.1 billion.
At the end of the month, management said on a conference call to discuss results that car payments were delayed as a result of the quarter ending on a weekend. However, as the company’s financial documentation reveals, “one entity” represented at least 10 percent of accounts receivable — and at this writing, the identity was unknown.
The company told the LA Times that the receivable had been tied to a partner bank for loans issued to U.S. customers, and that almost all of it had been cleared in the first few days of the quarter.
Music Festival Payments Back In Rhythm
Reports also came this week that at least two suppliers have been paid for services provided at the Bi-Mart Willamette Country Music Festival. Linn County residents would have been “on the hook” for non-payment with the police and fire departments for a total of more than $125,000 for security and health services. As had been reported, the music festival had been mired in late payments, as vendors had alerted authorities and the media that they had not been paid for thousands of dollars’ worth of work.