Fighting Back Against Late Payment Culture

itschrisnow · Jun 19, 2016

I belong to a group of IT specialists, and we would like to build a B2B review website where subcontractors would be able to rate and write extremely high-quality reviews about the main contractors they do business with, with an emphasis on late payment and non-payment.

We would like to offer an option where subcontractors could post their reviews anonymously, however, we would still need to ask the subcontractors to upload proof of identity, evidence of contracts agreed, photos of completed work etc.

I've got quite a few questions to ask so I'm hoping to start quite a discussion on this thread, however, my main question is what might deter subcontractors from posting reviews about main contractors, and what could be done to help subcontractors feel safe if they felt the need to name and shame a late payer?

Marvo · Jun 19, 2016

Hi Chris, I've approved this thread as a discussion but please avoid outbound links or advertising.

Thanks

Octopus · Jun 20, 2016

Think you are wasting your time.

Payment terms for ALL companies should be 30 days and enshrined in law by UK Government - a bit like it is in Germany but they will never do that.

Auditors are also complicit with allowing late payment as they don't point out overdue debts when auditing.

Dynamoaccounts · Jun 20, 2016

Murdoch said:
Auditors are also complicit with allowing late payment as they don't point out overdue debts when auditing.

Provided you put on your invoices, you are perfectly entitled to charge interest on amounts not received within terms which may discourage some but firms tend not to raise this charge for fear of losing the customer.

As for auditors, are you referring to internal or external auditors? We're registered auditors (external), during the course of normal audit testing, we do profile the aged debts of a client and bring this to the attention of directors, similarly with creditors as we have to assess the going concern of the business. However, it's not an external auditors responsibility to chase debts or make payments on behalf of a client. Similarly from an internal audit perspective, they're in place to give assurance as well as improve processes which could involve advising management but at the same time, it's the management of a company that make the decisions to pay/chase debts. The audit function is advisory and there to give an opinion.

Octopus · Jun 20, 2016

Dynamoaccounts said:
Provided you put on your invoices, you are perfectly entitled to charge interest on amounts not received within terms which may discourage some but firms tend not to raise this charge for fear of losing the customer.

As for auditors, are you referring to internal or external auditors? We're registered auditors (external), during the course of normal audit testing, we do profile the aged debts of a client and bring this to the attention of directors, similarly with creditors as we have to assess the going concern of the business. However, it's not an external auditors responsibility to chase debts or make payments on behalf of a client. Similarly from an internal audit perspective, they're in place to give assurance as well as improve processes which could involve advising management but at the same time, it's the management of a company that make the decisions to pay/chase debts. The audit function is advisory and there to give an opinion.

really!

you missed the point of my post - ALL payments should be made after 30 days.

davesparks · Jun 20, 2016

Murdoch said:
really!

you missed the point of my post - ALL payments should be made after 30 days.

I think you mean within 30 days, not after 30 days don't you?

Sent from my iPad using Tapatalk

Octopus · Jun 20, 2016

davesparks said:
I think you mean within 30 days, not after 30 days don't you?

Sent from my iPad using Tapatalk

Well, either, but certainly not 45, 60 or 90

davesparks · Jun 20, 2016

Murdoch said:
Well, either, but certainly not 45, 60 or 90

45, 60 and 90 days are all after 30 days

Sent from my iPad using Tapatalk

itschrisnow · Jun 21, 2016

Trust the germans to come up with the only system which works. Unfortunately, elsewhere the laws are weak, which is why we think a B2B website might help.

I'd be interested to hear specific reasons why you think such a website might not work.

Octopus · Jun 21, 2016

davesparks said:
45, 60 and 90 days are all after 30 days

Sent from my iPad using Tapatalk

I take your point.

Maybe I should have written originally "paid on or by the 30th day"

Government should intervene and make late payments illegal! It works in Germany, so why not here!

davesparks · Jun 21, 2016

Murdoch said:
I take your point.

Maybe I should have written originally "paid on or by the 30th day"

Government should intervene and make late payments illegal! It works in Germany, so why not here!

Most of my regular customers (commercial) manage to pay on time, in fact they all pay early, and they therefore get my best possible service.

One who I no longer do work for would schedule the payment and send the remittance note on the 30th day and claim to have paid on time, but of course the payment took 3 days to clear. Personally I call that a late payment!

Sent from my iPad using Tapatalk

Marvo · Jun 21, 2016

itschrisnow said:
We would like to offer an option where subcontractors could post their reviews anonymously, however, we would still need to ask the subcontractors to upload proof of identity, evidence of contracts agreed, photos of completed work etc......

I think firstly most subbies would be very wary about divulging details of contracts, posing photographic evidence and discussing pricing and financial details in any kind of public forum. There would be no anonymity in most cases because it would be relatively easy for a main contractor on the receiving end of a bad report to figure out which sub-contractor had posted it even without any details.

I'd suggest look at a Hellopeter type website but aimed at UK contractors/sub-contractors and host it in a country like mine where there's no law against it.

Hellopeter is one of the websites I have bookmarked just for the comedy gold factor, here's just one example of the gems you get on there;

[ElectriciansForums.net] Fighting Back Against Late Payment Culture

itschrisnow · Jul 10, 2016

CONFIDENTIAL INFO AND NON-DISCLOSURE AGREEMENTS

Hi everyone,

I've been checking up on where such a B2B review website would stand with the law. I've categorised all the information in this spreadsheet:

https://docs.google.com/spreadsheets/d/1SODJgK0UzxACFfTE_xwUacsfm9G1i1cjp8B5HZCbQmU/pubhtml

Basically, the conclusion of my research is:

1. It is illegal for the subcontractor to send confidential information whether he has signed a confidentiality agreement or not.

2. It would be illegal for a B2B review website to disclose any information to the public if the information were suspected to be confidential.

3. The court can order the B2B review website to remove any review which the main contractor declares confidential.

4. The B2B review website is not allowed to publish posts which the B2B review website considers not true.

However:

5. Before any court orders the B2B review website to remove a review, they have to take into consideration the B2B review website's right to freedom of speech.

6. The B2B review website can re-post a review containing confidential information if it is proved in court to be in the public interest.

7. Confidentiality is a public right, and in the end, the court will have to judge whether the right of confidentiality is more important than the right of public interest. This will need to be judged on a case by case basis.

8. The B2B review website can publish confidential information as evidence that the main contractor has broken the law.

From a legal standpoint, continuing with a B2B review website is gonna be really tough. However, No.6 above does offer a way forward. It would definitely be in the public interest for the public to know which companies are late payers, and which companies are abusing their position by demanding extortionate trade credit from their suppliers.

The B2B review website would need to crowd-fund a bunch of legal cases to set a precedent. Only then would the main contractors think twice about getting take-down notices issued by the courts.

I hope this will be food for thought for you. Let me know what you think.