UK Government Cracks Down on Late Payments: How We Can Help Your Business Stay Ahead

The UK government has unveiled its most significant crackdown on late payments in a generation, aiming to support small and medium-sized enterprises (SMEs) across the country. This initiative is part of the government's broader "Plan for Change," designed to empower businesses and stimulate economic growth. With late payments costing the UK economy £11 billion annually and leading to the closure of 38 businesses every day, these reforms are both timely and crucial.

What’s Changing in UK Late Payment Laws?

The new legislation introduces several key measures to combat late payments:

• Maximum Payment Terms: Initially set at 60 days, with plans to reduce to 45 days, ensuring that businesses are paid more promptly.

• Mandatory Interest Charges: Companies will be legally required to pay interest on overdue invoices, providing a financial incentive for timely payments.

• Enhanced Enforcement Powers: The Small Business Commissioner will gain the authority to impose multimillion-pound fines on repeat offenders and conduct spot checks to ensure compliance.

• Audit Committee Oversight: Large companies will be required to disclose their payment practices in annual reports, with audit committees overseeing these disclosures at the board level.

These reforms position the UK to have the toughest late payment laws in the G7, aiming to create a more equitable environment for SMEs .

How Iplicit, Sage 50, and Sage 200 Can Help

At 4GL Concepts, we understand the challenges that late payments pose to businesses. Our software solutions Iplicit, Sage 50, and Sage 200 are equipped with features designed to streamline payment processes and ensure compliance with the new regulations.

Iplicit: Automating Late Payment Management

Iplicit, our cloud-based accounting solution, offers automation tools that can significantly reduce the burden of managing late payments:

• Automated Payment Runs: Iplicit allows you to set criteria for invoice selection, automatically presenting invoices that meet these criteria for payment. This feature simplifies the payment process and ensures timely payments.

• Direct Debit Integration: Through partnership with GoCardless, Iplicit enables businesses to schedule one-off or recurring payments on invoice due dates, minimizing late payments. Automated payment collection and reconciliation reduce time-consuming financial administration.

• Accounting Automation: Iplicit's automation tools help finance teams save time, reduce errors, and increase efficiency by automating financial tasks and simplifying month-end processes.

  
  

Sage 50 and Sage 200: Features to Combat Late Payments

Both Sage 50 and Sage 200 offer functionalities that support businesses in adhering to the new late payment laws:

• Late Payment Interest Charges: Sage 50 and Sage 200 allow businesses to calculate and apply late payment interest to customer accounts, ensuring compliance with the new mandatory interest charge regulations.

• Automated Debtor Tracking: Sage 200 users can simplify credit management and reduce late payments through integrations with tools like Credit Hound, which automate accounts receivable management, debtor tracking, and intelligent follow-ups.

• Payment Automation: Sage 200 offers features that automate financial transactions and account reconciliation, providing better visibility and control over cash flow.

Why This Matters for Your Business

The government's crackdown on late payments presents both challenges and opportunities for businesses:

• Compliance: Adhering to the new regulations is crucial to avoid potential fines and reputational damage.

• Cash Flow Management: Timely payments are essential for maintaining healthy cash flow, enabling businesses to invest in growth and innovation.

• Operational Efficiency: Leveraging automation tools can streamline payment processes, reduce administrative burdens, and improve overall efficiency.

  
  

By utilising the features offered by Iplicit, Sage 50, and Sage 200, businesses can navigate the new landscape effectively, ensuring compliance and fostering growth.

Get Started Today

At 4GL Concepts, we are committed to helping businesses adapt to the evolving regulatory environment. Our team is ready to assist you in implementing the necessary tools and processes to manage late payments effectively.

Contact us today to learn more about how our solutions can support your business in this new era of late payment management.

Read more about the new changes here -

• Government to introduce 'toughest laws on late payments'

• Labour says firms will be penalised for late payments to suppliers

• Big companies must disclose if they pay suppliers late, under UK overhaul