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Serial late payers 'should be fined'

One of the UK’s biggest accounting trade bodies has recommended the introduction of fines to tackle poor payment practices.

The Association of Accounting Technicians (AAT) said the Prompt Payment Code should be made compulsory for companies with more than 250 staff. 

It also proposed that maximum payment terms should be halved from 60 to 30 days, and “a clear, simple financial penalty regime” should be introduced for persistent late payers.

The trade body said the penalty regime should be introduced and enforced by the government’s small business commissioner.

SNP MP for Kilmarnock and Loudoun Alan Brown was one of several MPs from across the political divide to come out in support of the recommendations.

Mr Brown said: “I’m fully supportive of AAT’s calls to make the Prompt Payment Code compulsory for larger companies, especially construction companies.

“Too many of these big organisations use the withholding of payments to SMEs to bolster their cashflow, as was the case with Carillion.”

Conservative MP for Altrincham and Sale West and chair of the 1922 Committee Sir Graham Brady added: “The reforms suggested by AAT appear to be a good solution to this longstanding problem.

“Prompt payment is essential for most businesses but particularly SMEs who often suffer real problems when not paid in a reasonable timeframe.”

Labour MP for Bury North James Frith, Green Party MP for Brighton Caroline Lucas and Lib Dem business spokesman Lord Fox have all come out in support of the recommendations.

AAT head of public affairs and public policy Phil Hall said: “Years of voluntary initiatives and half-baked measures have not delivered what’s needed.”

He added: “It’s time for government to take action.”

The Aldous Bill, which seeks to make it unlawful for clients and contractors to hold retention monies directly, is due to have its second reading on 23 November.

The industry is currently divided as to whether or not to back the bill, with some bodies arguing that efforts should be directed towards completely abolishing retentions instead.

Readers' comments (2)

  • Speaking as a veteran SME who has suffered at the hand of late payers for 30+ years - I'd say: that would be nice, wouldn't it but I doubt Government have the appetite even in the wake of Carillon

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  • Serial late payers 'should be fined'
    ...........Keir are shaking in their boots........ with laughter......

    The Association of Accounting Technicians (AAT) said the Prompt Payment Code should be made compulsory for companies with more than 250 staff.
    ...........why only 250+ staff ......any business with over 20 staff usually has at least 1 full time accounts person - qualified or not.

    As an accountant myself (degree qualified outside of the UK) all I can say is that accountants (both qualified and not), CFO's and FD's and their company accountants, auditors and bank managers, are a very big part of the problem. I am resigned to their poor training, poor attitude and in many cases a total lack of basic morals and business ethics when it comes to payment policies and practices. And the rudeness of many of them when you ask for a payment date for overdue invoices beggars belief.

    Can the AAT explain what training, if any, they give their members in business ethics and payment policies and practices.

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