Department for Business, Energy & Industrial Strategy, has announced plans help crackdown on bigger businesses which have poor payment practices towards their smaller suppliers and contractors, increasing the powers of the Small Business Commissioner; and to strengthen the Prompt Payment Code.
Some of the primary elements of this include:
- Proposed new powers for Small Business Commissioner to tackle late payments through fines and binding payment plans
- company boards to be held accountable for supply chain payment practices for the first time
- new fund to encourage businesses to use technology to simplify invoicing, payment and credit management
What has been the reaction?
FSB National Chairman Mike Cherry said: “Late payments and poor practices are a scourge which leads to the closure of 50,000 small businesses a year. Today’s measures will for the first time see the culprits brought to account.
“When small firms are paid late, it causes financial hardship and stifles growth. Everyone deserves to be paid on time when they have done the work and provided the goods and services requested. No one should have to wait months on end to receive the money they’re owed.
Shadow minister Bill Esterson said: “In broadly welcoming these measures, I hope that the government’s delivery matches the rhetoric.”
The Specialist Engineering Contractors (SEC) Group said that it had hoped that BEIS would proceed further with making the Prompt Payment Code mandatory and reducing the maximum payment terms to 30 days (currently at 60 days), in accordance with the Public Contracts Regulations 2015.
NFB chief executive Richard Beresford said: “Despite changes to the Prompt Payment Code, 50,000 businesses fail every year because of late payment. Even the department for business admitted that payment times are getting longer. How many more businesses have to go under before we make late payment a thing of the past?”
Nick Sangwin, NFB national chair, added: “These proposals for consultation will further expose the failure of the government to tackle late payment. It’s time to do the right thing and kill off late payment, rather than kicking the can down the road once again. Today’s announcement does not help small construction businesses who are about to go under because they are owed money. Nothing has changed for SMEs.”
We welcome any support to help businesses get paid but feel that this approach just isn’t enough, as it doesn’t help SMEs who are owed invoices by other SME’s.
Steve Pritchard – Founder Checklate said “It’s not just big businesses who pay invoices late, though the approach is right, we feel it just isn’t enough to abolish late payments all together. We feel the right approach is to make all companies more accountable, providing transparency on whether a company pays on time, increases the pressure on the company (no matter their size) as their public reputation is at stake.”
“Checklate was set up to provide transparency to all on whether a company pays their invoices on time, this provides a higher level of due-dilligence to the supplier, forwarned is forarmed.”