KENT and Medway's small firms will be in a no-win situation when late payment legislation comes into force next week, warns

the Association of Chartered Certified Accountants (ACCA).

At present, the Late Payment Act allows firms with fewer than 50 employees to charge larger companies interest at eight per cent above base rate on overdue bills. From August 7, under the Late Payment of Commercial Debts Regulations 2002, this right will be extended to enable all businesses, government departments and local or public authorities to charge interest on unpaid debts.

Robin Jarvis, Head of ACCA's Small Business Unit, said: "The cash flow implications of late payment of debts owed to small businesses have been the cause of many small business failures.

"However, small businesses are reluctant to use their statutory right to claim interest from late paying clients for fear of driving away business.

"On August 7, small businesses could be faced with a situation of 'double jeopardy' because, while they may not take advantage of the Act due to their more vulnerable economic and negotiating positions, it is likely that larger companies and public sector bodies will do so."

ACCA said small businesses could reduce the impact by: only entering into contracts which can realistically be fulfilled; invoicing clients immediately and accurately, as errors can cause grounds for non-payment; agreeing in writing specific terms of trade to avoid discrepancies; nsuring that payment terms are stated clearly on invoices and payment dates are in bold text; using a set company policy for chasing debt; running credit checks on both new and existing clients.

More advice on dealing with late payment can be obtained from the Better Payment Practice Group's website www.payontime.co.uk