A whole raft of new ideas have been announced in the past few months, from a 'conciliation service' for small businesses that are owed money, to forcing big brands to publicise their payment terms, to trade associations going to war (figuratively speaking) on behalf of their members.
It might all feel a little bit like Groundhog Day - again. Publicising payment terms is already a principle of the totally voluntary and largely toothless Prompt Payment Code, we already have mediation, and unless you're actually a member of a very active and involved trade association, that part's likely to leave you feeling cold.
So is it a case of 'nice idea, shame about the detail'? Yes, probably. But the problem isn't a lack of ideas - it's too many. We already have laws and legislation to allow you to name your payment terms and take action when invoice deadlines are missed.
What we really don't need are good intentions, and a slew of 'best practice' voluntary codes and ethics that muddy the waters, and simply give the bad payers of this world another chance to slow down payment even more, while still dodging any legal penalties that would alert others to their bully-boy tactics.
Mediation by any other name
A 'conciliation service' for micro-businesses that are owed money sounds like a good idea, but is it really everything it claims to be?
The idea is for the smallest of firms to be able to recover debts without fear of negative repercussions - because we all know there's a dread of chasing debts in case you get blacklisted by future clients.
It's a panacea for a problem that really shouldn't exist, because there's no way you should have to feel reluctant to chase money that's legitimately owed to you, let alone go through a mediation process to negotiate getting it paid.
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And of course it's basically a variation on the existing Alternative Dispute Resolution (ADR) processes already offered bu the courts. These services are fine in theory, but we know from experience that some unscrupulous companies include mediation clauses in contracts, not from any legitimate desire to settle a dispute amicably, but purely to provide yet another barrier to litigation to the creditor.
Look at the escalation ladder - from written final demands from an independent debt collection company right through to litigation and enforcement - and there are plenty of ways to recover a debt amicably, without needing yet another government plan that basically does little more than rehash the existing options.
On top of the conciliation service, there are also plans to give trade bodies the ability to challenge unfair payment practices on behalf of their members.
Again, this sounds good in theory - it's a bit like getting your big brother to beat up the school bully - but it shouldn't be mistaken for small businesses taking action in their own right.
For a start, not everyone is a member of a trade association and, even if you are, that shouldn't be what determines whether or not you get paid what you are owed or how long it takes to receive payment.
Secondly, trade bodies have plenty to do already, without acting as a mediation service or debt collector for their members. That's what debt collection agencies, solicitors and the courts are there for - you simply shouldn't need to get your association involved when an invoice goes overdue, or when somebody wants to pay you in 120 days' time.
Third and final, let's not forget, your payment terms are your own business, not your trade association's - for example, let's say your association decides 60-day terms are OK for their members, but you prefer 30-day terms. What then?
Only one person or organisation should set your terms, and that's you yourself. And when payment is overdue, you need an ally wholeheartedly committed to chasing that debt, not a trade association that's just been handed those powers for the first time.
Whilst we applaud the government's continuing commitment to championing the rights of the SMEs that form the backbone of our economy, the current plans just don’t seem to stack up.
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Our modest but highly skilled team has a combined total of over 150 years of experience in commercial credit management and B2B debt collection. From independent IT contractors to major film and TV publishers, Safe Collections has the knowledge and experience you need to get paid quickly and cost effectively.
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