UKIP has pledged to get tough on late payment, introducing a system of fines. Is this the answer to this SME bête noire?

Election season is well and truly upon us and UKIP has stridden into the debate on late payment. While party proclamations should be taken with (at least) a healthy pinch of salt, in particular those coming from the controversial Nigel Farage, comments such as “existing regulations of little practical use: small businesses are reluctant to charge interest to customers and legal proceedings are expensive, time-consuming and hardly an effective way to develop business relationships” are hardly far-fetched.

Despite much discussion and numerous initiatives (the Prompt Payment Code) and pledges to tackle the problem, including from Small Business Ambassador Karren Brady, late payment continues to cost small business millions, affect cashflow and impede growth.

So would the UKIP system, based on confidential complaints to HMRC and fines for repeat offenders, really work? It certainly seems worth considering, whoever ends up in Number 10 after the election. However, SMEs are unlikely to put much trust in politicians’ pledges. That’s why alternative finance, in particular invoice finance, offers a more tangible solution.

Invoice finance offers SMEs an instantly available, flexible means of combating late payment and safeguarding cashflow without endangering business relationships. New figures from the Asset Based Finance Association illustrate just how popular this service is becoming: asset-based lending is expected to pass the £20 billion mark in the UK and Ireland by the end of 2015 (compared with £19.4 billion in 2014).

As the political parties try to secure the business sector vote, it is already clear that alternative finance is going to be a winner in 2015.

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