ACCA calls for strong action to tackle late payments 

The Association for Chartered Certified Accountants (ACCA) has called for improved reporting on poor payment practices and an extension of the Small Business Commissioner’s (SBC) power, as part of action to tackle the “crippling effect” of late payments on small businesses. 

In its response to government consultations reviewing late payment measures, ACCA warned that late payment remains a “persistent problem” across the UK. 

It added that poor payment practices have a “domino effect” on cashflow across supply chains, with “devastating consequences” for small businesses. 

The accountancy body acknowledged the need to avoid unnecessary regulatory burdens for businesses but stressed the need to expect high standards from large firms’ corporate reporting. 

It also highlighted that reporting requirements needed to be “retained and strengthened”, with criteria amended to tackle under-reporting of payment practices in relation to overall value of late payments, the nature of disputed invoices, as well as the use of intermediaries in settling payment. 

ACCA also suggested that larger firms should include their payment performance to suppliers in directors’ reports, as well as signalling whether they have signed up to the Prompt Payment Code.

Glenn Collins, head of technical and strategic engagement, ACCA UK said: “Legislation is an important component of tackling poor payment and it is important to retain, and strengthen – not weaken – the regulatory approach, alongside other measures such as education and awareness raising around the impact of late payments. 

“We know that businesses are increasingly focusing on their supply chain reporting, whether through best practice in corporate governance, or through increasing sustainability commitments. It makes sense to dovetail better reporting on payment practices into this work, so strengthening the current reporting requirements is a proportionate response to the ongoing problem facing so many small businesses.”

He added: “As amongst the most trusted advisers to small businesses, accountants have a key role to play in supporting firms to minimise their risk of falling victim to late payment. We’ve worked closely with the SBC to shine a spotlight on late payment and develop the tools to tackle it. 

“We know there’s more to do so we support a stronger role for the SBC to instigate investigations. Similarly, it’s key to enable small firms to make informed decisions about who they do business with, so government needs to commit to do more to extend the availability of payment performance information.”