Late payers

Predictably, given the economic climate, the bigger companies are now stringing out their suppliers to even greater lengths than is usual. Boots (now owned by a private equity outfit, boo-hiss) is demanding a payment discount from its creditors, and small and medium sized enterprises generally are struggling for lack of cashflow.  The Late Payment of Commercial Debts legislation is, like so much of the legislation passed by the current administration, proving its worth only in so far as it keeps paper and ink manufacturers gainfully occupied.

Commentators elsewhere have come up with various suggestions over how larger enterprises can be encouraged to stop using their smaller suppliers as a source of free finance. The levying of a 2% corporation tax surcharge on companies with a payment record in excess of 60 days or, perhaps, the inspection of company's aged creditor lists by BERR (pronounced DTI) with fines for the recalcitrant payers.

But, better still, why not allow SMEs to assign their trade debts to the Revenue in settlement of the SMEs' tax and VAT liabilities ? This would have a number of advantages. With the Revenue now being a government body whose only competency is extracting cash, debt collection should come easy to them. The MNEs will love the extra attention from the Revenue. The two sides can cosy up to each other even more than normal. And everyone else can be left alone to get on with shoring up the economy, whilst there's still something left of it.