The UK’s small businesses are starting to make use of the Small Business Commissioner who has so far recovered more than £3.5million in late payments.
The Small Business Commissioner was launched by the Government in December 2017 to help small firms tackle payment disputes - and particularly unpaid invoices - with larger companies.
Recent research by Funding Options found that the commissioner had clawed back £3.4million for 91 small businesses, with £3.1million of that being recovered in the six-month period from September 2018 to February 2019 alone. This was the result of 52 complaints received by businesses and compares to £380,000 repaid from 30 received complaints in the six months prior to that. The amount recovered has now risen to more than £3.5million.
The hope is that the work will continue to gain momentum with more small businesses turning to the commissioner’s office for payment dispute resolution.
Prompt Payment Code
Action is also being taken against companies that fail to meet the standards of the Prompt Payment Code – which includes a commitment to pay 95% of all supplier invoices within 60 days.
Thousands of companies sign up to the code, which is administered by the Chartered Institute for Credit Management (CICM) on behalf of the Government, in a pledge to end the culture of late payment.
CICM has been reviewing whether businesses signed up to the code are meeting its standards and paying suppliers promptly. Where they are failing, these companies are being named and suspended from the code, unless they provide a plan for change. If they don’t, they will be removed altogether.
Fifteen of 17 businesses highlighted for poor payment practices at the end of April have already filed action plans or are preparing submissions to improve the treatment of their small suppliers.
Paul Uppal, the Small Business Commissioner, is also highlighting specific cases of poor payment practices following investigations into specific complaints from businesses.
Mr Uppal said: “As a Prompt Payment Code Compliance Board member, I will continue to support Philip King (Chairman of the Board and CICM Chief Executive) in removing or suspending non-compliant signatories from the code. It is essential the code has credibility and demonstrates a commitment to ensure small businesses are treated fairly.
“My team has already recovered more than £3.5million in late payments and is ready and available to support small businesses experiencing poor payment practices.”
The Government has also announced that failure to demonstrate prompt payment to suppliers could result in companies being prevented from winning government contracts.
From 1 September this year, suppliers who bid for government contracts above £5million per year will be required to demonstrate effective and fair payment processes.
Small business ‘backbone’
Kelly Tolhurst, Small Business Minister, added: “Small businesses are the backbone of our economy and through our modern Industrial Strategy we are ensuring they continue to thrive and that the UK remains a great place to start and grow a business.
“Over five years, the amount owed in late payments has halved, but we are going further. That’s why we appointed a Small Business Commissioner to help recover money owed to small business and in the coming months we will set out our response to the consultation on ending the culture of late payments, with plans to level the playing field for small business.”
To report a company for unfair payment practices, or for more information on dealing with unpaid invoices, visit https://www.smallbusinesscommissioner.gov.uk/.