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News Release from: PKF Accountants & Business Advisers | Subject: European late payment act
Edited by the Manufacturingtalk Editorial
Team on 14 August 2002
European late payment act will squeeze
SMEs
A European directive on late payment will place big burdens on UK Small and Medium Sized Enterprises because they will be forced to compete on the same playing field as large corporates.
A European directive on late payment will place big burdens on UK Small and Medium Sized Enterprises (SMEs) because they will be forced to compete on the same playing field as large corporates, says accountants and business advisors, PKF The directive, announced ahead of schedule on 7 August, will mean that SMEs in distribution businesses (eg wholesalers and computer, food and manufacturing industries) who buy their goods from blue chips will be chased for payment by large credit groups who will use the full force of the law against them
This article was originally published on Manufacturingtalk on 29 Jun 2006 at 8.00am (UK)
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Businesses will be able to claim up to GBP 100 in debt recovery costs for time spent chasing each overdue bill as well as interest - up until now, only small firms could use it.
It will result in larger companies being able to escape penalty fines because they have the internal and external resources to fight back whilst smaller firms will be squeezed.
Nitin Joshi, corporate recovery partner at PKF said, "This is another European directive that will result in UK SMEs getting a raw deal.
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10,000 UK businesses go under each year owing to late payment and the vast majority are SMEs.
Up until now, the law was on their side but this will result in the smaller firms - the lifeblood our of our economy - being unfairly disadvantaged".
Nitin offers five top tips to help SMEs avoid large late payment penalties:- 1.
Outsource your receivables management to a specialist firm wherever possible.
2.
Don't become supplier dependent - try to buy from a number of different sources.
3.
Look out for interest and late payment clauses when you sign purchaser terms and conditions.
4.
Get a service level agreement from your solicitor which includes details of payment dates.
5.
Buy from non-EU suppliers to avoid unfair regulation procedures.
For further information on the European Late Payment Directive please contact:- www.dti.gov.uk/ PKF is holding a seminar on Wednesday 30 October 2002 in London and on Thursday 31 October in Guildford, called 'Making the most of international trade - the ins and outs for UK businesses'.
The seminar will bring together an experienced team from the banking and accounting worlds and offer practical advice and information on global cash management, protecting against foreign currency risks, indirect tax issues and transfer pricing arrangements.
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