Tackling the scourge of late payment
The heat is on big business as a package of new measures looks to end the blight of late payment that puts so much pressure on smaller suppliers.
When these businesses are paid late it stifles growth, causes financial hardship and can even force companies out of business. Late payments are currently estimated to cost the UK’s SMEs a massive £6.7bn annually.
Announcing the new measures, the minister for small business Kelly Tolhurst declared: “They will ensure that small businesses are given the support they need and ensure that they get paid quickly – ending the unacceptable culture of late payment.”
So what exactly are the changes? And what impact will they have?
For the first time company boards will be held accountable for their payment practices and could be penalised for failing to pay on time.
The office of the Small Business Commissioner has been given new powers to tackle late payments – including fines and binding payment plans.
The Prompt Payment Code has also been strengthened and a new fund has been set up to encourage businesses to use technology to simplify invoicing, payment and credit management.
Late payments cost the UK’s SMEs a massive £6.7bn annually
And the audit committees of big businesses will have to report payment practices in company annual reports.
Blackpool-based Federation of Small Businesses (FSB) chairman Mike Cherry has welcomed the crackdown. He said: “Late payments and poor practices are a scourge which leads to the closure of 50,000 small businesses a year. The measures will for the first time see the culprits brought to account.”
Small businesses across Lancashire grappling with the problems caused by late payment will hope that is the case.
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