The recognised standard
in credit management
Established in 1939, the Institute of Credit Management is Europe's largest association for the credit management profession

‘Firing the silver bullet’ – a blog by Philip King FICM, Chief Executive

11 December 2013

So the government has now published the consultation promised by David Cameron in October looking at late payment. It is titled: ‘Building a responsible payment culture’, and organisations/individuals have until the end of January to respond and submit comments. The ICM will of course be responding and has invited its members to submit their views through a survey containing the consultation questions.

The discussion paper is quite wide-ranging but two areas are given particular focus asking for ideas on how they can be made more effective: the first is late payment legislation which is so seldom used; and the other is voluntary measures such as the Prompt Payment Code hosted and administered for BIS by the ICM. What is crystal clear is that this is not a new issue and that there is no single solution waiting to be unearthed. Paying late is, and always has been, a way of managing cashflow but that doesn’t make it right, especially when it involves the exploitation of small businesses by their larger counterparts.

Many reading this will remember the days of quarterly utility and phone bills – before the convenience of monthly direct debit arrangements – when people would wait for the red bill as a way of delaying payment until the next pay cheque had been received. The same principles are applied in B2B transactions and, as its title suggests, BIS is looking for ways to build a responsible payment culture where “businesses accept as a matter of course their obligation to pay what they owe when they owe it.” To put it another way, as I’ve often been quoted, to build a culture where paying on time is the norm not the exception.

In our press release at the beginning of the week I said that good credit management is, in many ways, a silver bullet. Established good credit management principles can play a significant role in improving cashflow and preventing late payment. I’ve since been slightly misquoted as having said “late payment can be overcome”, as if that will be the cure of all ills.

That’s not quite what I said but it is indisputable that getting the basics of credit management right is one of the measures that will help address the late payment issue. If we can also find ways to encourage businesses to use the legislation put in place to protect them, and strengthen voluntary measures, we might just see progress towards that more responsible payment culture for which we all yearn.


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