SMALL businesses will be in a no-win situation when new late payment legislation comes into operation tomorrow, it is claimed.

The Association of Chartered Certified Accountants is not happy about new rules which will make it possible for anyone involved in a business contract to claim statutory interest or compensation arising from late payment. At present, the Late Payment Act allows small companies -- those with fewer than 50 employees -- to charge larger companies interest at eight per cent above the basic rate on overdue invoices. Under the new Late Payment of Commercial Debts Regulations, this right will be extended to enable all businesses, Government departments and public authorities to charge interest on unpaid debts, including those from small firms.

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."

"Tomorrow 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 is advising small businesses to adopt the following steps:

Only enter into contracts which can realistically be fulfilled.

Invoice clients immediately and accurately, as errors can cause grounds

for non-payment.

Agree in writing with customers specific terms of trade to avoid

discrepancies.

Ensure that payment terms are stated clearly on invoices and payment dates

are in bold text.

Use a set company policy for chasing debt.

Run 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