Last Tuesday, 25 October, Farhan Nagda, a Managing Partner at Edge Accountants, was invited to share his thoughts on late payment issues at a panel discussion at ACCA (The Association of Chartered Certified Accountants) UK headquarters.

At an 11am breakfast meeting, Farhan and the other attendees met to talk about the repercussions of late payment on business owners and their employees, as well as the impact of cutbacks and the lack of investment in small businesses. The meeting was hosted by Glenn Collins, the Head of Policy, Technical and Strategic Engagement at ACCA UK.

A constructive morning followed, in which the panel identified HMRC and large corporations as key culprits in the late payment of invoices. Not only are large businesses delaying payments without reasonable cause, HMRC is failing to make VAT payments on time, adding to the stress experienced by SMEs and their owners.

How big is the problem of late payments?

To indicate the scale of the problem, the government reported in 2021 that some £23.4 billion worth of late invoices were owed to firms across Britain, leading to many having to close. As a result, the Prompt Payment Code was updated to give large companies 30 days instead of 60 to pay small businesses for the supply of goods and services.

Despite almost 3,000 businesses having signed the Code, however, many payments were delayed well beyond the initial 60-day target, showing little hope for adherence to a new 30-day target. According to the Federation for Small Businesses (FSB), around 50,000 businesses are forced to close each year because of late payments.

With SMEs accounting for 99.9% of the business population in 2021 this is an issue that has knock-on effects across the British economy.

Data from the FSB shows that SMEs account for three fifths of the employment and around half of turnover in the UK private sector. Businesses with 0 to 49 members of staff employ some 12.9 million workers, with a turnover of £1.6 trillion – 36% of the total for the private sector.

Edge Accountants’ contribution to the discussion

Following the discussion at ACCA headquarters, the panel went to Westminster to present their thoughts to Douglas Chapman MP and UK Small Business Commissioner, Liz Barclay.

As part of the group, Farhan discussed the daily challenges that Edge Accountants’ clients face in getting paid on time by their customers. He was also able to outline the impact of overdue invoices on the mental and physical health of business owners, and advocate for better representation of small businesses in Parliament.

The panel raised points about the lack of an information portal or toolkit for SMEs, the need for HMRC to be more proactive with making VAT payments, and the challenges faced by SMEs that need to access finance. There was also discussion around the clarity of the term ‘due date’ and how it should be interpreted.

Let Edge Accountants help with your invoices

As a client-focused business, we at Edge Accountants are delighted that Farhan was invited to take part in the discussions. Not only do we aim to assist clients with all their accounting, property, tax and mortgage needs, but we welcome the chance to proactively support them through events such as this.

If you’d like to learn more about how we can help your business to thrive in these challenging times, get in touch with our team today.