Long wait for late pay justice
Page 22
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Britain is one of only three European countries which refuses to legislate on the problem of late payment. Are hauliers going broke as a result?
by Nicky Clarke • According to the Forum of Private Business, late payment drives up to 5,000 businesses to the wall every year.
But the Government has ruled out statutory interest on overdue bills for at least two more years.
This decision, announced in the White Paper on competitiveness (CM 2-8 June), flies in the face of pressure from hundreds of MPs and industry bodies including the FPB and Dunn & Bradstreet.
Ineffective
The Department of Trade and Industry claims that late-payment legislation in some European countries is ineffective.
Dunn & Bradstreet's Phillip Mellor replies that while France has only recently passed laws on this subject, Sweden's legislation has been in effect for 18 years "so we can see what works".
Apart from the UK, the only EC countries without late-payment laws are Eire and Portugal and we can only expect legislation if the Government's proposals fail to reduce payment times over the next two years.
The Confederation of British Industiy says legislation would have a negative impact on industry. "Having a law will cost small companies time and money to take larger companies to court," it says. The CBI would prefer a voluntary code of practice.
Late payment affects all types and sizes of business. The difference in opinion comes in deciding how to combat it. In general smaller hauliers support legislation, while bigger ones favour voluntary guidelines.
Late payment problems for small hauliers tend to set in when they start dealing with a third party, be it another transporter or a freight forwarder.
Owner-drivers are most likely to survive if at least 60-70% of their work is direct with a cus tomer, says owner-driver Graham Cordiner of Peterhead, Grampian.
Ralph Coombs of Macclesfield, Cheshire goes further: "I refuse to use a third party," he says.
"They take so long to pay and they're running on your credit, so half the time you have to go into an overdraft." They both support legislation to ensure prompt
payment.
P&O Distribution operations director Andy Packer approves of the Government decision not to legislate the problem. "I can't see a supplier taking a customer to court." he says. (See Sound Off, page 41.)