Vince Cable “missing the point” on late payment

Vince Cable’s “Trip Advisor”-style proposals for naming and shaming late payers once again misses the key point about tackling late payment, according to Charles Wilson, the CEO of law firm Lovetts.

“While this is an improvement on the proposal to impose fines announced in August, I am not convinced a review-style site like Trip Advisor is going to spur businesses into paying their invoices sooner,” says Wilson.

 “Late payment is too ingrained in our business culture for many businesses to be overly concerned by a poor review about their payment performance.

“Rather the opposite, in fact – sadly, many see it as a badge of honour. I really would argue again that the key point about tackling late payment is establishing a good working relationship at the outset. Set your terms and conditions out clearly so that customers know that late payment is not part of the deal.”

Wilson says that businesses should instead do more to demonstrate the value of what they offer at the start of a relationship.

“If SMEs are contracted on the basis that the customer really values their contribution, treating the contract as a form of partnership and showing what has to be gained beyond the provision of pure commodity, then I firmly believe the customer is more likely to pay on time,” he explains.

“If everyone just chases sales, without strong relationships and without setting down clear deal terms, then there’s less motivation by big companies to pay. Corporate commitment must be exacted at contract stage. 

“SMEs are generally united in being innovative, agile and highly focused on service – they need to demonstrate these qualities in spades to support improved relationships with big customers.” 

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