The end of late payments by large organisations?
The government has been trying to combat the widespread issue of large businesses abusing their position by making late payments to small businesses. This initiative has included the launch of the voluntary Prompt Payment Code (PPC) in April 2017 where over 2,000 signatories have committed to the fair and equal treatment of payments to suppliers including to smaller businesses. The PPC and other measures have helped reduce the amount owed to smaller businesses in late payments.
However, this remains an important issue that needs to be tackled as nearly a quarter of UK businesses report that late payments are a threat to their survival. In fact, the Federation of Small Businesses suggests that tackling the issue of late payments could add £2.5bn to the UK economy and keep an extra 50,000 businesses open each year. The Small Business Minister Kelly Tolhurst has announced new proposals that will examine what other measures can be put in place to tackle unfair payment practices.
- a call for evidence to consider the best way company boards can put in place responsible payment practices throughout their supply chain, for example giving a non-executive director specific responsibilities for the company’s prompt payment performance; and
- promoting innovative technologies, such as the latest accounting software, to help small firms manage their payments processes, and empowering trade bodies to highlight the best and worst practices in payment behaviour.
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 5 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. Today’s new 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.’