The Better Payment Practice Group is pushing to get small businesses to have their say in a government consultation process due to end in a fortnight.
According to the paper, 10,000 businesses fail as a consequence of late payment annually. A study by the Federation of Small Businesses says of the £17bn owed to small businesses, £6.8bn is paid late – the average is 46 days.
An EC directive which came into force last August gives creditors the right to claim reasonable compensation from debtors for all relevant costs incurred chasing invoices, on top of the interest charges they already have to pay under UK law. The UK and other member states have until August 2002 to incorporate the directive into their own legislation.
Peter Rowe, director general of the Institute of Credit Management, said: ‘What that effectively means is if a company has to go to some expense to get its money back, it will be compensated, and that hasn?t happened before.’
The document issued by the Small Business Service aims to find the best way of determining how to calculate compensation in the UK. Rowe said it put forward eight options on how to calculate reasonable recovery costs, which small businesses are to vote for.