Letter: Measures to end late payments

Sir: Your Business Commentary 'Late payers need early attention' (6 August) gives a simplistic view of what is a very difficult problem. While many of our European neighbours have late payment legislation - for statutory interest on outstanding debt - statutory interest is actually hardly ever used, for exactly the reason you mention. Small businesses do not want to 'sour trading relationships'. It is difficult to take a customer to court and back to the order book. Indeed, one of the countries you mention, France, has late payment problems worse than those in Britain, despite statutory interest laws.

Furthermore, all our European neighbours recognise the freedom of suppliers and customers to agree terms without government interference. While this is right and proper, it does severely limit the scope for legislation.

Nevertheless, I recognise that late payment is a serious problem. What we must do is create a business culture in which late payment is just not done. While government will play its part through, for example, the measures announced in the Budget, much of the answer must lie with business putting its own house in order.

The issue, as you rightly say, is cash flow. Legislation, however much the procedures are speeded up, will not solve this. I would suggest government policy is not eccentric, but realistic.

Yours faithfully,

DENTON

Parliamentary Under-Secretary for

Consumer Affairs and Small Firms

Department of Trade and Industry

London, SW1

12 August