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Simple solution
There is a simple solution to this problem. You let HMRC collect late payment fines and not customers. That way HMRC can use their 'guilty until proven innocent' powers to force companies to prove that they have paid on time.
That way the onus falls on Accounts Payable to chase invoices and monitor payment periods to avoid a costly fine.
For those that pay on time and have good AP practices it would be a simple compliance report.
Until you have something that makes AP funding more expensive than a bank, then large companies will exploit their power.
NeilW
Late payments
This I believe is a UK problem.
I find the Japanese pay in 21 days, the Europeans (except French, who can be as bad as the British) pay in 30 days, Asians about 45 days, and they apologise if they don't! Even the US pay in 30 days.
60 or 90 days month end seems to be doing well here!
Think about it
Who are customers more frightened of?
- a small supplier who knows that they can't enforce the late payment legislation if they want any more orders.
- HMRC who can go through the order book and fine the company for every invoice paid late on the usual 'guilty until proven innocent' basis.
Which is more likely to promote a culture of 'on-time' payments?
NeilW
I see it as a PACT
Late payments can happen this way :
Sales Manager sold goods for his company to customer Mr B. Mr B presented the invoice to his company for payment by CASH.
Facts :
- invoice is $ 10,000
- Mr B sents the invoice $ 10,000 for payment approval and obtained cash from his company to settle invoice.
- Sales Manager banks in $ 10,000 to his own personal bank account
- Sales Manager loans RM 1,000 to Mr B as promised before the contract of sales took effect
- Sales Manager holds on to this "unsettled" invoice for a long long time, say, 24 month, before payment is made by Sales Manager issuing his personal cheque and banking it into his company's bank account
Sales Manager and Mr B are just staff, not bosses nor own their companies.
Does this sound a reason why payments are delayed?
I wonder how anti-money launderers think.