Ready, steady….

In a speech to the Federation of Small Businesses last week, opposition leader Jeremy Corbyn pre-empted the announcement of a snap election by making some early policy pledges. Of particular interest to us at My Credit Controllers (MCC), Mr Corbyn highlighted the threat to small businesses caused by systematic late payment. He pointed the finger at large companies who were using credit with small suppliers as a means of funding their cashflow requirement, while at the same time threatening the very existence of those suppliers. Mr Corbyn said “Cash is king for any business, and big companies are managing their cash by borrowing – interest free - from their suppliers,” . Further adding that “It’s a national scandal. And it’s stopping businesses from growing and causing thousands to go bust every year. It kills jobs and holds back economic growth.”

He also said that some £26 billion is being withheld in late payments and that this contributes to the failure of 50,000 businesses each year. He goes on to promise that any company bidding for public sector contracts under a Labour government will be bound to pay its suppliers within 30 days. The party will also consult on a system of “binding arbitration” to resolve late payments disputes.

Here at MCC we support any move to legislate for fairness in paying suppliers according to agreed terms, but in the meantime it can always be a struggle to deal with these unfair and threatening practices. That was one of the main motivations for setting up MCC; helping SMEs get what is rightly theirs. Lets see what the other parties have to say on this issue in the run up to the June election.

Does the Late Payment of Commercial Debts Act Apply in Scotland?

Our article explaining how businesses have a legal right to add interest and compensation to unpaid invoices is one of the most visited pages on the My Credit Controllers website.

Recently we received an enquiry asking whether the legislation applies the same way in Scotland as it does in England and Wales.

The simple answer is 'yes' - the interest rate you can apply, the compensation payment and the ability to add 'reasonable recovery costs' are just the same in Scotland as elsewhere in the UK.

You can check this yourself using the legislation.gov.uk website.

The original legislation that applies is the Late Payment of Commercial Debts (Interest) Act 1998. This law was first created in 1998 by the government in Westminster, but has been amended over the years - in 2002, 2013 and 2015.

Amendments from 2002 onwards were made separately by the UK parliament and by the Scottish Government, but it seems that the amendments were coordinated so that the legislation in effect remained the same both north and south of the border.

If you open up the latest version (revised), and tick the 'Show Geographical Extent' check-box on the left side of the page you'll see at the top of the page that the legislation applies in all the devolved regions of the UK.  The image below shows the marked up page with the geographical extent shown and notes to show which parts have been amended by subsequent regulation.

So, yes, adding interest to overdue commercial invoices works just the same in Scotland, so get on over to our late payment interest calculator to work out how much interest and compensation you should add.

Welcome to the My Credit Controllers Blog

We will be writing blogs on issues relating to getting paid on time by your customers, government policy in this area, and best practice on how to manage your cash flow and...well anything that interests us.

We hope you enjoy it.  Please check back!

The My Credit Controllers team.