By Darren Fell of Crunch Accounting in Hove

Credit control is one of the trickier aspects of running your own business.

A web designer, cupcake baker or plumber doesn’t start up on their own expecting to have to be a part-time debt collector.

Imagine your small business completed a hefty chunk of work for a huge national business and invoiced them, expecting payment within a week or two, only to be told the invoice would be settled in three months time. You could have it sooner, but you’d have to sacrifice 5% of the total for the privilege.

Sounds ludicrous, but that is exactly what happened to suppliers of department store giant Selfridges. Boots, too, have employed similar tactics.

These tactics are not just predatory, they are actively hurting the economy as businesses close up shop due to cashflow shortfalls.

Recent figures from credit firm Experian show that late payments from the largest business are actually getting later still – averaging 33.9 days over agreed payment terms (up two days on the same period last year). Meanwhile late payments from small businesses and freelancers are actually getting faster.

The problem has become so widespread that the Institute of Credit Management put together the Prompt Payment Code, a ‘voluntary’ commitment which business minister Michael Fallon is currently attempting to force the entire FTSE 350 to agree to.

It seems incredible that we reached a situation where the nation’s most monied businesses are actively withholding earned money from their suppliers, while those same suppliers are managing to pay their bills quicker.

Not only that, but these huge businesses are being made to cross-their-hearts-andhope- to-die that they’ll try their very hardest to pay their suppliers on time. An obligation which is, lest we forget, a legally binding one to begin with.

The coalition government may have been a bit hit-and-miss with their support for small businesses, but at last took one step forward in March when they updated late payment laws to help those suffering at the hands of delinquent payers.

Not only can businesses claim back the money they are owed, plus one-off penalties and interest, they can now also reclaim the cost of any debt collection services they had to employ in order to recover the money they were owed. This means a business need never be out of pocket when recovering commercial debt from suppliers, which is great news for freelancers and small firms who lack the deep pockets of their larger peers.

What would be a better solution to ongoing cashflow hardships, however, would be for big firms to meet their contractual obligations and pay on time. They could even – try to contain your gasps – pay their suppliers early.

Wouldn’t that be something?