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Don't Let Late Payments Close Your Business

This is Money reported last month that a quarter of small- and medium-sized building businesses are in danger of closing because of late payments from customers. Combine this with the difficulties that B2B suppliers are having, and the situation for small businesses starts to look dire.

Getting paid on time is absolutely crucial for keeping enough cash on hand to successfully run your business; if you don't have cash, you can't invest in the materials and employees that you need to keep doing what you do best.

Fortunately, suppliers and small businesses aren't alone in pushing for better payment practices. The Prompt Payment Code, administered by the Chartered Institute of Credit Management, encourages all businesses to make prompt payments, give clear guidance to suppliers, and encourage good practices. It also sets a 60-day payment period, with a goal of establishing 30 days as the norm.

Signing up for the Code requires five referees that can vouch for your good payment practices. The tenets of the code are monitored and enforced, and an annual report must be submitted to the Institute for continued membership.

Although many business owners don't yet know about the Code, it seems likely that being a member will strongly support bids on large projects and other supplier relationships in the future.

Signing up for and encouraging others to sign up for the Code is a great way to start changing the culture of late payments in the UK. It's becoming a problem, and small business owners need to band together to improve the conditions for everyone. Whether you decide to sign up for the Code or not, taking steps to encourage a standard expectation prompt payment is important for all business owners in the UK.

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