18 companies suspended from government’s prompt payment code
A further 18 large companies have been removed from the government’s prompt payment code after they were found to take longer than 60 days to pay their suppliers.
The second wave of suspensions from the government's prompt payment code saw 18 companies removed over late payment times, following the previous suspension of 17 companies in April, the FSB revealed.
Late payments to small firms, either from larger companies or government bodies, can have a devastating impact on businesses in the supply chain, causing severe cash flow issues, and forcing 50,000 UK firms out of business each year.
In order to tackle late payments, the UK government announced recently it is introducing a swathe of new powers for the small business commissioner, including the capacity to fine or introduce binding payment plans for the worst payers. The government has also reformed its prompt payment code, meaning that from September bidders for government contracts above £5 million per annum will be asked to demonstrate they have paid 95 per cent of their invoices within 60 days.
Moreover, company boards are now being held accountable for payment performance to small businesses, with measures forcing audit committees to report payment practices in company annual reports.
In a recent press release, the FSB applauded the government's initiative and emphasised its own efforts to alleviate the pressure on small business by partnering with the Financial Ombudsman.
"FSB has been working with the Financial Ombudsman to try to raise awareness of their service, to ensure that more small businesses do not suffer in silence and encouraging them to make a complaint when they feel they have been wronged," said FSB chair Tina McKenzie.
"The Ombudsman has recently expanded its service and can now assist businesses with up to 50 employees with less than £5 million turnover, providing the source of the complaint occurred after 1 April 2019. For complaints which originate prior to this date, the Ombudsman can still assist micro enterprises with fewer than 10 employees."
She noted that it is vital that business owners use every avenue open to them to seek help and guidance.
"Too often small firms feel like the ‘little guy’ when they come up against mistreatment by government, larger businesses or financial institutions," Ms McKenzie concluded.