A European directive on late payment will place big burdens on UK Small and Medium Sized Enterprises because they will be forced to compete on the same playing field as large corporates.

European late payment act will squeeze SMEs A European directiveon late payment will place big burdens on UK Small and MediumSized Enterprises (SMEs) because they will be forced to competeon the same playing field as large corporates, says accountantsand business advisors, PKF. The directive, announced ahead ofschedule on 7 August, will mean that SMEs in distributionbusinesses (eg wholesalers and computer, food and manufacturingindustries) who buy their goods from blue chips will be chasedfor payment by large credit groups who will use the full force ofthe law against them. Businesses will be able to claim up to GBP100 in debt recovery costs for time spent chasing each overduebill as well as interest - up until now, only small firms coulduse it.

It will result in larger companies being able to escapepenalty fines because they have the internal and externalresources to fight back whilst smaller firms will be squeezed.Nitin Joshi, corporate recovery partner at PKF said, 'Thisis another European directive that will result in UK SMEs gettinga raw deal.

10,000 UK businesses go under each year owing to latepayment and the vast majority are SMEs.

Up until now, the law wason their side but this will result in the smaller firms - thelifeblood our of our economy - being unfairlydisadvantaged'.

Nitin offers five top tips to help SMEsavoid large late payment penalties:- 1.

Outsource yourreceivables management to a specialist firm wherever possible.

2.Don't become supplier dependent - try to buy from a numberof different sources.

3.Look out for interest and late paymentclauses when you sign purchaser terms and conditions.

4.Get aservice level agreement from your solicitor which includesdetails of payment dates.

5.Buy from non-EU suppliers to avoidunfair regulation procedures.

For further information on theEuropean Late Payment Directive please contact:- www.dti.gov.uk/PKF is holding a seminar on Wednesday 30 October 2002 in Londonand on Thursday 31 October in Guildford, called 'Making themost of international trade - the ins and outs for UKbusinesses'.

The seminar will bring together an experiencedteam from the banking and accounting worlds and offer practicaladvice and information on global cash management, protectingagainst foreign currency risks, indirect tax issues and transferpricing arrangements.