Merseyside late payers face ‘business ASBOs’ from small firms champion

May 6 2009 by Neil Hodgson, Liverpool Daily Post

MERSEYSIDE firms who settle their bills late could be handed a business version of an ASBO (anti-social behaviour order) to name and shame the worst culprits.

Small firms lobby group The Federation of Small Businesses (FSB) has warned late paying companies that it intends to get tougher in the fight to reduce a debt mountain estimated at almost £26bn owed to small companies in outstanding payments.

It claims a quarter of all business failures are due to cash flow problems caused by late payments, and said some firms can take more than a year to settle their bills.

The FSB said small businesses are being used by larger organisations as their external source of credit.

And the organisation explained that it has been forced to take this action after Chancellor Alistair Darling failed to address the issue of late payment in last month’s Budget.

FSB leaders have called on the Chancellor to give Companies House more resources and legislative backing to publicly name, shame and fine companies that renege on their previously agreed payment terms. But they said, until that happens, the FSB will contact larger organisations on hearing complaints about payment times and will name and shame firms which are confirmed to be paying late or unfairly with its own version of a company-focused ASBO.

Norman Lay, Merseyside, West Cheshire & Wigan regional chairman for the Federation of Small Businesses, said: “FSB research shows that over a third of small businesses are waiting longer to be paid for private sector work.

“This comes despite the government-backed Prompt Payment Code, launched last November, which called for fairer payment practices between large and small businesses.

“With around 120 businesses closing a day, effective action must be taken to show larger businesses that small firms are not an external source of credit.

“It is time for Companies House to be given more teeth and use powers within the Companies Act to name, shame and fine late payers and end this trend once and for all.”

Mr Lay added: “Meanwhile, the FSB will tackle this serious problem by issuing ASBOs which will essentially name and shame those companies that take small businesses for a ride.”