Monday, 05 January 2015 15:07

'Small Business Conciliation Service' - Mediation by Any Other Name

Where do small businesses turn for help when they suffer due to late payment? Under new government plans, there could soon be a Small Business Conciliation Service tasked with tackling that precise problem.

That's not its official name as yet - and in fact, you could be forgiven for thinking you already know of a 'conciliation service' for small business disputes, in the form of mediation.

In many ways mediation already provides the service needed to resolve disputes between small businesses, including on late payments, but like so much of the existing structure to prevent payment disputes, it simply goes unused for much of the time.

Even when both creditor and debtor agree to go to mediation, it's still rarely the route that gets used to resolve the dispute, so it's hard to imagine giving it a grander name will do much to change that.

Regardless of that fact, the Association of Independent Professionals and the Self Employed (IPSE) have welcomed the plans as a way for their members to pursue settlement of client debts without going to court.

IPSE director of policy and external affairs Simon McVicker said:

"Late payment is a crippling issue for the UK's smallest businesses. The current Catch-22 situation means that microbusinesses are often unable to chase clients for payment that isn't forthcoming for fear of damaging important business relationships.

"When it comes to payment, big businesses have long had their smaller providers over a barrel. Introducing a small business conciliation service to resolve disputes will go a long way in helping freelancers get the payment they deserve without lengthy court action."

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New results from an IPSE survey show that 79% of people support strengthening the rules to ensure small businesses are paid on time; 78% of people support the creation of a method to do this without going to court; and only 5% of people are specifically opposed to stricter rules on late payment.

Let's be clear on something:

  • Businesses of all sizes have the right to be paid on time, without patronising 'kid gloves' for SMEs or pandering to the big brands.
  • The UK courts system exists to enforce the law - there's only so much you can do to create legislation that's enforceable without court action.
  • Mediation already exists as a way to settle disputes without court action, but is not widely used.

So yet again, this whole discussion seems to be about solving a problem that doesn't exist - access to conciliation services for small businesses - instead of the actual problem, which is that SMEs simply don't enforce the law on late payments.

If you're going to be successful in business, you must be ready to take action against people who put your business under threat - and that includes those who effectively steal from you by failing to pay.

All the legislation in the world won't help unless you put it into force (and we really don't want to see a world where late payments become subject to government-collected interest and fees, without businesses having the option of flexibility on this).

So the next time you have a payment dispute to reconcile, take firm action immediately; you may be able to avoid court action by pursuing quickly and earnestly for settlement, and there's always mediation as an alternative if you need it.

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