The broadly asset-heavy nature of coach and bus means that ‘good’ debt is a normal part of the sector. Cash flow is thus king, and few can be the company owners or finance directors who have not quietly cursed a customer for missing a payment deadline.
Work by the government to clamp down on late B2B payers will thus be welcome. ‘Long’ payment terms are also under scrutiny, with a consultation on the late payment landscape further looking at setting a hard 60-day maximum term that cannot be exceeded, even by mutual agreement.
Further reducing that backstop to 45 days after five years and introducing mandatory statutory interest of 8% above the base rate on late payments are also proposed in a package that the Department for Business and Trade says will back small businesses. That it will, although SMEs will of course be subject to it as debtors as well as creditors.
Less positively, there is no sign of tackling the practice of unilaterally invoking low-percentage “discounts” from invoices by a tiny minority of larger customers that do so in the knowledge that some – albeit not all – suppliers will buckle under worry of losing trade.
Sitting the proposals against additional costs from change to National Insurance will still leave an unfavourable position for small businesses compared to 2024, although strengthening their payment hand is welcome; the wider number of those that have been put to the sword by the actions of poor payers is no doubt significant.
The consultation runs to 23 October. It can be found here.
