The upcoming general election has thrust the issue of late payment back into the spotlight as politicians pledge to improve conditions for businesses. But how much stock should business owners put in these promises, and are the political parties overlooking a key tool?

While it is always wise to take politicians’ promises with a sack or three of salt, it is encouraging to see the main political parties focusing on key issues relating to the small business sector, including late payment. Details from a new survey on late payment from Intuit QuickBooks is a fresh reminder of the pall that the practice casts over the sector.

According to the study, which involved 500 small businesses, firms spend 56.4 million hours a year chasing overdue payments, with over half chasing these payments outside of work time. In terms of cost, the report put the cost of chasing late payments at an eye-watering £6.3 billion, with some companies waiting over 200 days for invoices to be settled. Notably, the survey found that most of the companies guilty of late payment are larger firms.

Figures from the Federation of Small Businesses underline the severity of the situation. According to the organisation, small businesses are owed, on average, over £6,000 and almost 40% of these firms suffer cashflow problems as a result of late payment. It also claims that the practice drives around 50,000 companies to the wall every year.

So, it is positive to hear the Labour Party announce plans to crack down on late payment and to read that the Conservative Party is promising to address conditions for small businesses. Both parties have also pledged to tackle the issue of business rates.

However, as welcome as these words are, small business owners are unlikely to get too carried away, given the track record of various recent governments. For any of the pledges to be taken seriously, it is clear that more details are required. And there is one specific detail, or tool, that politicians would do well to include.

In the wake of prolonged caution from traditional lenders, a position that Brexit is helping to entrench, alternative finance is providing small businesses with access to capital for vital investment. The most widely used alternative finance facility is invoice finance, which can offer some protection against late payment.

This easily accessible, affordable and flexible service allows firms to secure capital and safeguard cashflow without jeopardising key business relationships. As much as 90% of an approved invoice can be advanced by a finance provider, with the remainder settled by the customer.

The fight against late payment has been significantly strengthened in recent years, but there is still some way to go in terms of finding a solution and a general election could help maintain this momentum. If politicians want to be taken seriously in their effort to fix the late payment problem, alternative finance has to be part of the conversation.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.