What will late payment look like in 2021?
Already in 2021 British businesses have been forced to deal with the worsening impact of the pandemic, the transition from the EU and the huge uncertainty facing all of us.
But will getting paid on time also continue to plague business owners?
Here, we look at some of the things which could affect payment times this year.
We’d love to know what you think too. Let us know in the comments below.
Government support for small businesses will increase
A consultation was held at the end of 2020 looking into increasing the scope and powers of the Small Business Commissioner.
The consultation, which ran from 1 October 2020 to 24 December 2020, sought views on strengthening the Commissioner’s ability to provide small businesses with mechanisms for redress in respect of late payments.
Whilst we are still waiting to see the outcome from this consultation, the Small Business Commissioner, Philip King, started the year by outlining how his Office will work hard in 2021 to make payment prompt.
In his New year vlog, he said: “My oft-repeated plea for collaboration rather than confrontation is going to be more relevant than ever across the business community.
“For the SBC we’re looking forward to the imminent launch of the reformed Prompt Payment Code.
“We’re going to continue talking to large businesses about how best they can support their smallest suppliers and we’re going to continue collaborating with a wide range of business organisations.”
But late payment and insolvencies will continue to rise
The coronavirus pandemic has already exacerbated the late payment burden hitting UK businesses, according to the Institute of Directors (IoD).
Their research showed that over a third of company directors said they had faced an increase in late payments during the pandemic, with almost one in ten reporting they had experienced significantly more problems than usual.
The Institute warned that this could worsen as restrictions continue.
With the end of many Government support schemes on the horizon, we will likely see more businesses facing financial distress and a spike in insolvencies.
Whilst this has always threatened a knock-on effect throughout supply chains, the return of crown preference is likely to increase the casualties.
From December 2020, HMRC became a preferential creditor. So now, in any form of insolvency process, HMRC will rank ahead of other creditors, notably funders and trade suppliers.
This means that any unsecured creditors face the possibility of seeing reduced returns if a company becomes insolvent and this could echo down the supply chain.
As well as this, it could mean less cash is made available to businesses as many lenders may be concerned about their returns.
At a time when businesses desperately need ongoing financial support to meet the challenges thrown up by the pandemic and navigate the recovery, when it arrives, this move could impede many viable companies.
Our support will remain available
Whilst many things remain uncertain, one thing we can guarantee is that as long as we are needed, we will be here to help.
So, if you need help getting paid, call us on 0800 9774848 or request a call back to discuss the range of debt collection and credit control services we can provide.
What do you think getting paid will look like in 2021? Let us know in the comments below.