A payment date should mean something

Letter from the table

To the Cashflow Council,

Ruth in Cardiff, I read your letter during the consultation and recognized the difficult stretch you described: the work is finished, the invoice has been sent, and the money still cannot be counted on. That gap is not a small administrative inconvenience when you are the one expected to keep everything moving.

In February, I completed a piece of work for a large buyer. I will not name the buyer or describe my business. The invoice was for £3,240, issued on 2 February, with payment due within 30 days. Nobody disputed the amount or said the work was incomplete. The due date came and went.

On 10 March I sent a polite reminder. On 20 March I called the accounts-payable desk. I was told the invoice was in the system and that I should allow more time. On 7 April I sent the invoice again, with the purchase reference and the original email attached. I kept my messages calm. I also kept a note of every date, because after a while you begin to wonder whether the problem is your memory or their process.

The money arrived in two parts: £1,500 on 18 April and the remaining £1,740 on 7 May. By then, I had already covered the costs of completing the work. I moved money I had set aside for another bill and delayed replacing equipment I needed. Nothing dramatic happened; that is part of the point. A business can be made less secure by a series of ordinary choices forced on it by someone else’s delay.

In the UK, the Late Payment of Commercial Debts (Interest) Act provides for statutory interest on qualifying late commercial payments: 8% above the Bank of England base rate. It also provides fixed compensation, with the amount depending on the debt. I knew that I could raise the issue formally. But knowing a right exists and feeling able to use it are not the same thing. I worried that pushing too hard would cost me future work. I did not claim interest or compensation. I followed up, waited, and absorbed the cost.

I also looked for practical help. I checked the guidance from the Small Business Commissioner and considered whether to take the dispute further. The Commissioner can help eligible small businesses with late-payment disputes, including through assistance with resolution. But a process that starts after the due date does not put cash in the account on the day it was needed. And a small supplier still has to decide whether pursuing a remedy is worth the time, uncertainty and strain on the relationship.

The Late Payments Bill introduced in the House of Lords on 19 May is a proposal, not a rule already in force. Its proposed measures include a 60-day maximum payment term, mandatory interest and stronger powers for the Small Business Commissioner. Those are important steps. But a 60-day outer limit is not a timely payment standard for a small supplier that has done what was asked and sent an undisputed invoice.

That is why I support CF-001, the 15-Day Pay Standard. It asks large buyers to pay small suppliers within 15 days of an undisputed invoice, apply interest automatically when payment is late, and publish payment times. The three parts belong together.

Fifteen days would change the point at which a buyer has to treat payment as an operational responsibility, rather than an item that can sit in a queue. Automatic interest would mean that a supplier does not have to choose between asserting a right and protecting a customer relationship. Publishing payment times would let suppliers, workers and the public see whether a buyer’s stated practice matches what happens.

I know there will be questions about invoices that are genuinely disputed, complex approval chains and how a standard should be implemented across borders. The draft should be clear about what counts as an undisputed invoice and how a buyer must raise a real dispute promptly. A genuine question about an invoice should not be used to delay the whole payment indefinitely. The answer to difficult cases should be a fair process, not an open-ended waiting period.

Ruth, I do not know whether the experience you described ended as mine did, with the money eventually arriving. But eventual payment is not the same as fair payment. A supplier should not have to lend money to a large buyer simply because the buyer can make the supplier wait.

Notes and sources

Sources

1. UK Small Business Commissioner: Late Payments Bill and what it could mean for your business
2. UK Government response to the late payment consultation