Northern Ireland SMEs are still facing late payments from suppliers, an issue which is ultimately putting their business at financial risk according to a new report by ACCA (the Association of Chartered Certified Accountants). ‘Ending Late Payment: Reflections on the evidence’ is the third in a series of papers on the subject, and it highlights the need for policymakers to rethink how they manage and regulate trade credit and late payment.

ACCA believes Government and their policy makers have a big responsibility to build a financial infrastructure that diminishes late payment, and where trade credit can be boosted.

ACCA spokesperson on the issue Brian McGuire, ACCA Ulster Members’ Network said, “Late payment is life-threatening for many organisations in the UK including Northern Ireland, and its impact on the small business community is most acute. Those with fewer than 50 employees are typically twice as likely as large corporates to report problems with late payment.

“The fact is, with the right intervention, late payment doesn’t have to be an issue for businesses. At its most basic level, late payment is a form of credit and in an ideal world, where all solvent businesses would have prompt, uninterrupted access to finance from diverse sources; late payment would be very rare. It would present only a manageable risk to businesses.”

The report looks at how suppliers and buyers can improve the situation, by working more closely together, and by investing in customer / client relationships. On the supplier side, they can protect themselves through careful due diligence, and by understanding the administration of their operations. On the buyer’s side, they can protect themselves by signing up to prompt payment codes and sticking to them. In the interests of their own long term sustainability, they need to monitor the financial health of their supply chains and be vigilant.

Brian continued, “Despite its importance, ending late payment has proved to be an elusive goal for governments across the world. What the UK Government needs to recognise is that late payment is essentially a demand for credit and start tackling the problem as such. The Government needs to be fully focused on building a financial infrastructure that boosts trade credit through support of alternative finance and the free availability of credit information.

“This approach has the potential to be far more effective than the measures currently proposed around improving the legal framework for late payment disputes and ensures that Government policy makes a positive difference far earlier.

“When late payment becomes a chronic problem, supply chains are beyond repair and customer relationships fail. Opening the doors to trade credit for the UK’s businesses including Northern Ireland is a solution that could put a stop to late payment before it has even started.”

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For further information:

Shane Finnegan or Katrina Frazer, Aiken PRTel: 028 9066 3000Email: Shane@aikenpr.com or Katrina@aikenpr.com 

Notes to Editors

The report offers nine conditions that need to be met if trade credit is to be sustainable:1. Buyers’ and suppliers’ standard terms of credit should be transparent.2. Cash flows to suppliers should be predictable through explicit credit policies and contract terms.3. Invoicing, collections, accounts payable and invoice dispute processes should be efficient and transparent, with senior staff taking responsibility.4. The status of invoices should be easily monitored throughout their lifetime.5. Suppliers should be aware of the cost of providing credit to customers.6. Differentiated pricing should reflect the suppliers’ cost of capital, so that neither they nor their prompt-paying customers are forced to subsidise late payers in the long term7. Customers and suppliers should give each other adequate notice before seeking new terms of credit, so that alternative financing can be sought in time.8. Suppliers should seek to understand, and customers should be honest about, the causes of late payment and the viability of late paying customers.9. Payment plans should be set out explicitly in contract terms and genuinely troubled customers should opt for these rather than resorting to late payment.

About ACCAACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. It offers business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.ACCA supports its 178,000 members and 455,000 students in 181 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 92 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. It believes that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. ACCA’s core values are aligned to the needs of employers in all sectors and it ensures that through its range of qualifications, it prepares accountants for business. ACCA seeks to open up the profession to people of all backgrounds and remove artificial barriers, innovating its qualifications and delivery to meet the diverse needs of trainee professionals and their employers. More information is here: www.accaglobal.com