Small businesses across the UK are being asked for their views and experiences on unfair payment practices and proposals to create a more responsible payment culture.
The government is consulting on proposed new measures which it hopes will end the problem of late payments — and businesses have until November 29 to have their say.
The measures are largely designed to tackle the issue of large companies abusing their position in the market by paying small businesses late. Plans include empowering trade bodies to highlight best and worst practices, promoting innovative technologies such as accounting software and seeking views from some of the UK’s 5.7 million small businesses.
At the same time, the government has announced that Small Business Commissioner, Paul Uppal, will join the Prompt Payment Code’s Compliance Board to help tackle late payment, while the government has set itself the target that all its departments should commit to paying 90% of undisputed invoices from SMEs within five days.
Tackling late payments could boost growth
Almost a quarter of UK businesses say late payments are a threat to their survival and that tackling the problem could boost growth and jobs. Research from the Federation of Small Businesses suggests this could amount to as much as an additional £2.5bn for the UK economy while helping to keep an extra 50,000 firms in business.
Small Business Minister Kelly Tolhurst said:
“Our 5.7 million small businesses are the backbone of our economy, and ensuring we remain one of the best places in Europe to start and grow a small business is a key part of our modern Industrial Strategy.
“Over the past five years the amount owed to businesses in late payments has halved, but we will go further to make sure all of our small businesses are treated fairly.
“The call for evidence will help us identify the most effective way possible to tackle this issue once and for all and ensure small businesses are on a level playing field with their larger counterparts.”
National Chairman of the Federation of Small Businesses, Mike Cherry, said:
“Late payment is the biggest challenge affecting small businesses and it is good to see the government getting serious about this issue, especially when it comes to large firms paying their supply chains promptly.
“The voluntary Prompt Payment Code is not working when it allows signatories like Carillion to pay on terms of over 120 days, so we want to see a new tough and transparent compliance regime being proposed.”
Small Business Commissioner, Paul Uppal, added:
“I am looking forward to working with the Prompt Payment Code administration team and improving current processes to ensure timely payments, which will encourage growth and productivity for SMEs across the UK.
“Some large businesses use late payments and extended payment terms to exert control over small businesses in their supply chain, and the government will now seek the views of the UK business community on how best to ensure small businesses are given a fair deal.”
Businesses, trade associations and other interested parties have until 11.45pm on November 29 to take part in the late payment consultation.