What a disgraceful statistic and not one we can blame  on Greek  politics, the EU in general, the recession, unfavourable trading conditions, the greed of  financial institutions, or the payment mechanism to facilitate
the payments.

The answer is very straightforward.

We can search for palatable reasons that might paint the more established UK businesses in a good light but the sad fact is many companies think it is ethical business practice to pay a supplier when they feel like it. This could be two, three or four months after receiving products or services.

Interestingly, at the same time that a company might be running a corporate or social responsibility programme, to let the world know the company has a heart and staff jump out of planes or run for charity, they have a firm standing instruction that their accounts department have to adhere to, that is not so public, to pay your suppliers invoice date plus 60, 90 days or whatever.

Underneath this practice, is the premise that a healthy cash flow for any company can be achieved through not paying your debts for as long as possible and chasing your receivables immediately. I believe there are reputable small business mentors out there that are actually teaching this practice, though unlikely to own up to it. A production line of new companies brainwashed to think that paying late is the way forward - give me strength!

The UK is not the worst offender, Spain Portugal and Greece occupying the bottom three places within the EU, at close to five months late but only two countries last year, Finland and Estonia, complied with the EU Directive from 2013, which sees 30 days as being a reasonable period to deal with outstanding invoices.

Who does this benefit?

The conglomerate with 30 years or more experience, cash in the bank and healthy credit lines, or the small business trying to survive, when over 50% of new businesses don't make it past the first five years. Cashflow problems are a major cause of insolvencies that in some years have caused as many as 4,000 healthy companies going to the wall, while waiting for funds owed to them that never came through.

What weapons do you have at your disposal?

There are a number of ways in which you can chase late payments but the greater majority of them are relationship killers and the companies that pay late are very aware that you need their custom and that you are unlikely to take any steps that might prejudice the business you get from it.

• Firstly, above all, have a tight chasing procedure. So, when you send an invoice, check immediately that they have received it so this can't be used as an excuse for not paying later. Ask when you can expect payment and follow up regularly. This action keeps the relationship intact and they may pay you just to stop the calls. Just their accounts people harassed.
• You do in fact have the law on your side, in the form of the Late Payments of Commercial Debts Act from 1998, brought up to date and in line with legislation from Brussels in 2013. This gives you the right to charge interest 8% over base rate and some out of pocket fees for general admin in various circumstances, amount graded and can be backdated. This directive seems to have made no difference to the problem EU wide. The fixed penalty is also quite inadequate when overdraft charges can be up around 15%. Break this out when you no longer have the patience to work with the client in question.
• Getting legal help. Possibly the small claims mechanism might help or for larger amounts having your day in court might do it but this long winded and costly way of settling debt issues, does not favour the small business and can be the final nail in the coffin for a struggling company.
• A commercial solution is invoice discounting where you hand the problem over to someone else, experts in the area and they deal with that side of your financing. However that comes at a cost and might not be for everyone.

The UK was one of the first countries that brought in legislation to deal with late payments in 1998, refinforced in March 2013 as part of the European initiative,that also is not working, so we can boast 17 years in which we have failed to deal with the problem.

The future?

In July the government announced a new late payment project, based on a successful Australian system that is quite new and producing results down under. The position of Small Business Commissioner has been created to deal with the problem, not just concerned with payments, which I am sure will occupy the majority of their time but other malpractices also. Situations where companies have bullied their suppliers into lowering their rates or lose the business, would be handled here in due course as, in the Tesco's case earlier this year. They wanted to save money and ended up with a shed load of bad publicity.

This Commissioner will administrate a system designed to resolve commercial disputes quickly and without damaging the commercial relationships. In the words of Anna Soubry, Minister of State for Small Business Industry and Enterprise, the key functions of the new commissioner are to:

• Provide information, general advice and signposting
• Offer mediation to resolve disputes
• Deal with complaints

All of this at no cost to whatever size business that needs to use it.

New Business view

We suffer from the same problems any small business does and our accounts people waste time chasing funds, sending duplicate invoices, once five of them, sometimes incurring overdraft charges, all ultimately damaging the relationship and our collective feeling is that it is hugely disrespectful.

In 1998 when the UK government attempted to solve the payment problem, there was no such animal as social media but information is now disseminated very quickly. Those companies with a fixed policy of paying late should consider the implications to their reputation and share price should the government go public on the main offenders.

You can cloud the issue and wrap it up in grey but ultimately the companies that insist on doing it should have a downside. Some bad consequence that makes it too risky to continue the practice and New Business wishes the new commissioner every success in bringing about change as soon as possible.

Mark James, Editor New Business