Late payments directive – Moorfields comment on how the new regulation could help your business
Chasing late payments from large companies is a constant headache for small businesses everywhere. In many cases, a larger company can take a rather relaxed view of paying companies who they know cannot cause a major fuss and therefore late payments become ‘the norm’.
However, a new EU directive is set to alter the way in which transactions of this nature are carried out. SMEs across the UK, particularly those that could be struggling in the current financial climate, may be set to benefit significantly.
The process of planning ahead
The directive effectively means that all business will come under serious pressure to pay invoices within 60 days, something that offers struggling business that are waiting for payment the chance to plan ahead a bit more effectively than if they were waiting for an indefinite period. It is also worth noting that the directive is even tougher on public sector organisations that are perhaps slow in pushing payments through. They will be required to ensure payments are processed within a total of 30 days.
Cultivating a culture of increased respect
There is little doubt that the new directive will be a wake-up call for larger companies who have potentially lapsed into some bad habits. Once the directive has been in force for approximately 1 year, such companies will have been forced to change their ways and this will subsequently encourage a culture shift within the business world. If all companies, regardless of size, have respect for each other’s separate needs then we may find that everything runs a great deal smoother than it may have done previously.
Contacting an insolvency specialist
A restructuring and insolvency advice specialist can assist business leaders, financial directors and stakeholders to deliver practical and sustainable solutions for their business. They can also offer insightful advice regarding how to proceed in the future.
If you would like to have a free no obligation chat with one of our advisers please call us on 0207 186 1143.