Government to ensure small businesses get paid on time
For the first time large businesses could be fined for failing to pay smaller suppliers on time as part of a robust package of measures.
According to new measure introduced by the government, company boards will now be held accountable for payment practices to small businesses.
The ambitious package of measures, forcing audit committees to report payment practices in company annual reports, is aimed to level the playing field for the UK’s 5.7 million small businesses.
The government announced it will also consult on strengthening the powers of the small business commissioner to hold to account the minority of larger businesses who fail to make payments on time.
These new powers could include compelling information and disclosure of payment terms and practices, imposing financial penalties or binding payment plans on large businesses found to have unfair payment practices.
“The vast majority of businesses pay their bills on time, with the amount owed in late payments halved over the last five years. But as a former small business owner, I know the huge impact a late payment can have on the ability of a small business to plan, invest and grow,” said small business minister, Kelly Tolhurst.
Other proposals include a tough new approach to large companies which do not comply, as well as a Business Basics Fund competition of up to £1 million to encourage businesses to use technology to simplify invoicing, payment and credit management.
“The government has a range of measures in place to tackle late payment and this consultation is a further step in the right direction to protect and support small businesses,” small business commissioner Paul Uppal said.