subject: How long should contractors have to wait for settlement? [print this page] Hi, my names Alex and I work for Danbro Contractor Accoutants as part of the marketing team. In this article, I will be discussing a new settlement directive from the EU that could possibly get implemented, and the implications of this to contractors, freelancers and small businesses.
Contractor's current settlement time differs a lot according to which organisation they work for. For example contractors working for the NHS on average get paid within 10 days, but some organisations struggle to pay 20% within 30 days. Late settlement of invoices has become a big problem for the UK, estimated to be costing a whopping 24 billion in the UK per year.
The FPB (Forum of Private Business) has been campaigning to get the settlement time for invoices down, resulting in; the new Directive from the EU, called The Late Payments Directive, which aims to make sure all contractors get paid within a reasonable amount of time, 30 days.
Chief of the FPB, Phil Orford, also pointed out that although not all public sector bodies have adapted to using the ten day payment rule, abandoning it would be a step backwards. Meaning that organisations that currently pay contractors within ten days, might potentially revert to paying within 30 days instead if the new directive is introduced.
Gerry Gregoire from Danbro Umbrella Company Services says "Although the new directive may have an adverse effect on the businesses that pay early, a standardisation in the industry is needed to ensure all organisations have a deadline and stick to it".
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How long should contractors have to wait for settlement?
