Government to name and shame big business late payers?

According to some news agencies and business blogs “Large companies that fail to pay their small suppliers on time will be named and shamed online, the government has announced”.

On first reading this we wondered if we had somehow stumbled back in time to 2008, whether the Government had put a typo in the press release or had the news agencies syndicated a ghost story, but sure enough the article contained reference to the current Cabinet Office minister and Conservative MP for Horsham and Conservative, Francis Maude?

He said entrepreneurs should be encouraged to whistleblow on late payers in a mystery shopper style initiative with the names of the offenders to be published on the Cabinet Office website. Business owners will be able to complain anonymously if necessary.

The announcement came amid concerns that big businesses are not passing down the benefit of the Prompt Payment Scheme set up under the last government by Lord Mandelson, which in itself was a re-imaging, re-boot, (or just a re-name) of the 1997 scheme otherwise known as ‘The Better Payment Practice’

As a debt recovery firm witnessing the ill-effects of just how bad late payment problems can impact on UK small businesses we could be forgiven for saying we have seen it all before and the new promise is little more than a sound bite.

A point further put into context by the head of marketing at Bacs Mike Hutchinson,  who said “It’s a great shame that, while larger corporates are benefiting from swift public sector payments, they remain responsible for the lion’s share of the national late payment debt,”, which currently totals some £24billion owed to UK small businesses.

Naming and Shaming Big Corporates in practice

Unlike websites like Trip Advisor being used by the public to rate a small (non brand) hotel in terms of service, we fail to see how, without some major input and thought, that the Name and Shame mantra of Francis Maude’s Prompt Payment Code reimaging will work in the real world?

Big Corporate companies like the banks of Barclays, or as a point in case Santander, who remains BBC Watchdog’s most complained about bank which had 165,000 new complaints opened between 01 July 2010 to 31 December 2010. Barclays had 205,000 opened.

Yet even with such a high level of complaints and with the PPI mis-selling scandal, and Santander and Barclays putting aside £731m and £1billion respectively, they still made profits of £413m and £1.5billion.

So if their consumers have been let down and mis-sold to, then made 150-200,000 complaints in 1 year about each bank plus face a climate of rising credit costs, even under all time low interest rates, and with the banks in turn failing to meet the Merlin Project quotas, we would like to see how a TripAdvisor style website is going to make corporates pay small businesses on time?

Especially when (as a complete opposite to Trip Advisor) you are not paying for a service, but being paid to supply a service?

We will release a Poll shortly to see if our belief, which is that the Naming and Shaming of corporates is a mere political sound bite and wholly ineffective. If small businesses have the choice of getting a corporate customer (and knowing they would be paid late via said Name and Shame site) would they turn down the business, or would they try and cope as best as possible?

Therein lies the problem. If it is the later, all the naming and shaming wont do a thing so let’s see?

Cabinet Office website

Lastly, if as a small business owner you were to look on the Cabinet Office website as directed by Francis Maude, what would you see? Well, the site in itself is a maze, with links to sections on National Security, Constitutional Reform, Government Efficiency and the Big Society but nothing on Business or Late Payments. Furthermore a search for “late payment” returns nothing of relevance. Not even the press release about the naming and shaming and only brings up three items from the last 2 years?

Real Late Payment Tactics / No Sound bites

If  however you want to do more than name and shame, and actually get paid, give CCDR a call or send us an email.

We can discuss our range of services from no-collection no fee Debt Recovery and Commercial Debt Recovery, Credit Reports to help you assign the right levels of credit to your customers or perhaps Outsourced Credit Control to put in place an Accounts Team for when you can’t afford an in-house one.

Whatever the service, as a North West Development Agency nominated ‘High Growth Business’ we have achieved some excellent results and made some real differences to our clients and the number of ongoing new clients wins backs up our claim.

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