Truth behind the 30-day rule

KEN Lewandowski’s call (Insight, 19 February) for a legal requirement for a 30-day settlement of invoices must have received a heartfelt “Amen” from the managers of SMEs.

This problem has plagued business for years. There is a theory among cynics that large firms deliberately delay payments to small ones so that they can earn more interest from their own bank accounts. I once thought so too, but have now changed my mind.

Many years ago, I was hired by an American oil major to “kick ass”, as top management were sick of being threatened with legal action by unpaid SMEs. In spite of a company policy to settle all invoices “within 30 days”, it sometimes took up to two years for bills to be paid. I only needed a week to discover why: the company’s own convoluted bureaucracy was the problem.

The solution was simple. Firstly, trust your humble, front-line invoice-handlers to use their commonsense and do an honest job. Secondly, in complex cases involving large amounts of money, appoint an officer of proven integrity to approve the payment of invoices on his own initiative.

Stan Fisher, Prestwick