Firms hope late payer penalties will help cashflow

2 hours ago

David DixonBBC News Cornwall

News image — Farm machinery manufacturing company boss Tom Teagle said he would "wait and see" if the proposed changes are effective

BBC A man stands in a factory assembly area , behind him a man puts the final touches to a large piece of farm machinery. Tom wears protective glasses and ear plugs — Farm machinery manufacturing company boss Tom Teagle said he would "wait and see" if the proposed changes are effective

Businesses in Cornwall are hoping proposed government changes designed to tackle late payments will help resolved "pressure with cashflow".

The government said it was "determined to tackle the scourge of late payments which costs the UK economy £11 billion each year and leads to the closure of 38 UK businesses every day".

The proposed changes include a new 60-day cap on payment terms and mandatory interest on late payments set at 8% above the Bank of England base rate - it would also fine companies that persistently fail to pay their suppliers on time.

Cornish Coffee Company managing director Duncan Bond said: "If there's an incentive for people to pay quicker it helps cashflow enormously."

A man in a white coat smiles, behind him are large machines for coffee roasting and large blue bins that contain the beans. — Cornish Coffee Company MD Duncan Bond says the business owed around £300,000

Bond added: "Last year we wrote off around £15,000 to £20,000 and those were just straightforward bankruptcies and you can't stop that and at the moment we're owed around £300,000.

"When customers get behind with payments our account managers are the good cops and we have the bad cop upstairs, she's called Karen, she's very polite but customers are more scared of a call from our Karen than anything the government could do."

South East Cornwall MP Anna Gelderd saidlate payments were "the last thing any business needs and can push them into the red through no fault of their own".

'Wait and see'

Managing director of Teagle farm machinery based in St Agnes, Tom Teagle, said: "Around 65% of our revenue is from overseas so this scheme won't affect that... we are still a family run company and we try to retain that feel so we pay 95% of our suppliers within 30 days.

"We work with many farmers and some growers are under a huge amount of pressure with cashflow and that's the nature of the supply chain we have."

Teagle added: "Would I rely on the government to do our debt collecting? We'll wait and see."

Four people in white coats and food hygiene hair nets stand around a large machine that roasts coffee beans. — Government minister Blair McDougall visited The Cornish Coffee Company near Liskeard alongside local MP Anna Gelderd

Business Minister Blair McDougall visited the coffee company near Liskeard last week to publicise the scheme.

He said: "These are genuinely game changing measures that will ensure no business, no employer, no family has to endure the immense strain of being left strapped for cash they have already earned."

McDougall added: "Previous attempts to crack down on late payers have left too many loopholes where businesses can negotiate away their right to be paid quickly.

"Farmers have been complaining about it for decades and my message to big companies is to get ahead of it, start sorting out your payment practices now because not only will it cost you it's also just not fair."

A government spokesperson said the new legislation would be voted on in parliament "when time allows".