With small British firms owed approximately £26.8billion in late payments, the department for business, innovation and skills (BIS) has released a consultation paper to seek the public’s views on how to change payment legislation.
Late payments is a huge problem for SMEs
On average, small businesses are owed £31,901 in overdue payments, crippling thousands of SMEs nationwide.
The government is trying to clamp down on large businesses that fail to pay their small suppliers, with BIS intending to hire a new small business commissioner whose role will be to tackle late payments for goods and services.
In February, BIS also released a consultation paper on how they can provide business representative bodies with wider powers to challenge ‘grossly unfair’ contract terms and practices.
Not all large firms are guilty of withholding payments to their suppliers. In early October, Tesco CEO Dave Lewis announced that small and medium-sized businesses that supply Tesco supermarkets will receive their payments within 14 days.
This particular consultation document aims to hear from the small business community on a number of issues, including:
- Statutory measures on public procurement
- Establishing a small business commissioner
- Action to increase transparency on payment practices
- Promoting a wider culture change with a strengthened prompt payment code
‘Like to hear from businesses of all sizes’
Anna Soubry, the government’s minister for small business, industry and enterprise, believes that the document is another great step towards ending late payment problems for small businesses.
‘‘Small businesses are vital to our economic growth. But late payment continues to be a serious issue for small businesses and can cause serious cash flow problems and delay payments further down the supply chain,’’ said Soubry.
Soubry continued by listing all of the measures put in place to help small businesses clamp down on late payments, including the 2011 EU Late Payment Directive which gives microbusinesses the power to dispute ‘‘grossly unfair’’ contractual terms and practices.
‘‘I want small businesses to have the range of options available to then, and, where they need it, the opportunity to have the support of their business representative bodies.’’
‘‘I want you to tell us what you think of our proposal. I would like to hear from businesses of all sizes, and our small business representative organisation,’’ ended Soubry.
If you want to take part in the consultation paper, click here.