Contractor-friendly late payment plan 'should go further'

A recruitment body whose member firms place contractors has welcomed a plan to require large companies to publish information about their payment practices.

The Association of Recruitment Consultancies said the proposal from Vince Cable, the business secretary, represents a step in the right direction, but it believes that more still needs to be done.

“For far too long larger organisations, including local and government authorities, have forced suppliers to accept lengthy payment terms for services provided,” said ARC's chairman Adrian Marlowe.

“[Also], lengthy agreed payment terms have not been adhered to, with the same suppliers being left with the dilemma of deciding to wait for overdue payment, or to enforce the agreed terms.”

He added that many out-of-pocket suppliers are currently” loathe to take firm action,” such as by exercising their rights under late payment law, for fear of upsetting or losing the commercial relationship.

“Delayed payment can wreck the livelihoods of workers”, Mr Marlowe reflected. “We would therefore like to see more certainty and believe that this can only be achieved by regulation.”

A similar view is taken by contractors’ trade body PCG, which says incoming measures to target an increase in the accountability of signatories to the Prompt Payment Code are encouraging, but not sufficient.

“In order for it to be effective, the Prompt Payment Code must be compulsory for large companies and it must include sanctions for the worst offenders,” said PCG’s director of policy Simon McVicker.

“The reality is that the only way to ensure big companies pay up on time is to take direct legislative action.”

The group reiterated its call for a scheme to let micro businesses report late payers anonymously, so a one-person business could take a stand against a large corporation without commercial repercussions.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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