Late payment of invoices: is it an ethical practice?. (23rd May 2023)

• Record Type: Journal Article
• Authors: Tang, Audrey; Nandy, Monomita
• Is Part Of: International journal of critical accounting. Volume 13:Number 2(2023)
• Page Start: 165
• Page End: 190
• Publication Date: 2023-05-23
• Subjects: late payments -- small business -- sustainability -- action research; Accounting -- Periodicals; 657.05
• Languages: English
• ISSNs: 1757-9848

Abstract

The most common payment practice of many large firms is to pay their suppliers beyond 30 days post-invoice; this becomes unsustainable for the small business to have enough running costs to continue their operation. Small businesses have little influence on the late payments, which affect their growth and job creation opportunities on a wider scale. In this paper, we collect evidence of adverse effect of late payment and propose how to create an ethical awareness to mitigate the financial problems associated with late payment to small businesses. This paper considers the detrimental effect of late payments on small businesses in the UK and based on a new theoretical framework; we make recommendations to encourage meaningful motivators for invoices to be paid on time in practice. The findings will enrich the small business literature and will guide the policy makers to find a model that could provide more clarity of their existing policy on late payment.