FINANCE
WHY 2022 WILL BE A BIG YEAR IN THE CAMPAIGN TO END LATE PAYMENTS
BRITISH BUSINESSES ARE FACING A LATE PAYMENTS CRISIS , WITH £ 23.4 BILLION OF INVOICES LEFT UNPAID OVER THE LAST YEAR . BUT 2022 COULD BE THE YEAR THIS PROBLEM IS FINALLY ADDRESSED . FROM 1ST APRIL , NEW RULES WILL REQUIRE BUSINESSES TO PAY 90 % OF INVOICES WITHIN 60 DAYS , OR RISK BEING EXCLUDED FROM PUBLIC CONTRACTS .
From that data , companies bidding for government contracts must submit details of any payments of interest for late payments over the previous twelve months , as well as an explanation of why the delay in paying an invoice and an outline of what remedial steps have been taken to ensure this does not occur again .
There are at least 55.5 million small businesses in the UK , with 75 % having no employees except for the owner . When invoices go unpaid , small companies can face challenges meeting operating costs , servicing debt or paying employees and suppliers . Late payments are a major problem for small businesses , with tens of thousands collapsing every year because their clients fail to settle invoices on time .
The Co-operative Bank is working to develop technological solutions to the late payments ’ crisis . It is celebrating its 150th anniversary in 2022 and remains committed to the fair treatment of its business customers today as it did when it was founded in 1872 as part of the wider co-operative wholesale society .
It has championed and pioneered sustainable banking for almost 30 years by supporting local communities , treating customers fairly and honestly , and by paying people a living wage .
Catherine Douglas , managing director , SME , at The Co-operative Bank , said : “ The new rules on late payments are very welcome and will help to address this important issue . The statistics around late payments are startling . Yet it is important to look beyond the numbers and look at the human side of this crisis , which is affecting millions of hardworking people across the UK and having serious impacts upon their lives .”
“ The Co-operative Bank has a strong sense of community and is committed to the values and ethics that are such an important part of our heritage and how we do business . We put our customers ’ needs at the heart of everything we do . We ’ re now working very closely with the wider industry to find solutions to this problem . The banking sector needs to come together to support small businesses with tools and strategies which directly address this challenge .”
The Co-operative Bank is already offering innovative ways of helping companies get paid on time and cope with the issues caused by unpredictable income , and is working with the banking technology platform provider BankiFi ( www . bankifi . com ) to develop tech which allows businesses to collect instant , secure and cost-effective payments from their customers .
It has also set out clear , easy-to-follow guidance for businesses on how to chase unpaid invoices , ensure clients make payments on time and lodge complaints through the UK Government ’ s Prompt Payment Code . The bank is working closely with smaller companies through in-person meetings and video calls to advise them of financial options which can help them cope with delayed invoice payments .
BankiFi ’ s solution to the problem of late payments is a Request to Pay ( RTP ) service called Incomeing , which it launched in association with The Cooperative Bank . It allows businesses to send secure , real-time payment requests using text , email and WhatsApp , as well as QR codes which can allow simple face-to-face transactions . This means a business owner could meet a client in person , who can then pay an invoice simply by scanning the QR code .
The solution is powered by Open Banking technology and ensures funds are transferred into a chosen account immediately , boosting cash flow . Incomeing also generates invoices , streamlines the process of chasing late payments and automates financial admin through deep integration with all major accounting applications .
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