Lord Harrison, the Vice Chair of APPG Small Firms, is the latest figure to wade into the late payment debate. Another voice is welcome, but will it change anything?

Late payment has long been a thorn in the side of small businesses, causing problems with cashflow and restricting growth potential. Every now and again, a prominent figure will speak out against the pressure that SMEs find themselves under because of the poor payment policies of larger companies. A familiar argument is rolled out – small businesses are owed millions (£16.9 million according to new research by Intuit QuickBooks) and existing measures, such as the Prompt Payment Code, are unenforceable and ineffectual.

Lord Harrison is the latest to declare that it’s time to get tough against late payers, following amongst others, Conservative Party Small Business Ambassador Karren Brady and former Minister for Business, Enterprise and Energy Matthew Hancock. So, are late payers finally going to feel the wrath of new measures to clamp down on the tardy processing of invoices? It would be great if that happens, but recent history suggests that SME owners shouldn’t get too carried away.

What this latest declaration of intended action does underline is the role of alternative finance, in particular invoice finance, in tackling the problem of late payment. The perceived risk to business relationships has long weakened the response of SMEs towards late payers, and understandably so. But by using invoice finance, SMEs can safeguard against the damage done by late payment without jeopardising important client relationships.

A new RSA report has found that micro-businesses are driving much of the UK’s economic growth. Hence, to further nurture this success, it’s time that late payment was properly tackled and it is clear that alternative finance needs to play a prominent role.

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