Draft regulations published this week will mandate that larger companies make public how they are treating their suppliers. According to the FSB, the overall level of late payment owed to SMEs stood at £26.8bn last summer, while on average 30% of payments are late, a
Now, the ‘duty to report’ regime will require large companies and limited liability partnerships (LLPs) to publicly report twice yearly on their payment practices and performance, including the average time taken to pay supplier invoices.
The news was welcomed by a range of stakeholders. Carl D’Ammassa, Group Managing Director of Business Finance at Aldermore Bank, said. “Our SME clients often tell us how late payments are significantly hindering their growth, which clearly has a knock-on impact on the growth of the wider UK economy. Late settlement of invoices is particularly detrimental to smaller companies who tend not to have as much liquidity as larger businesses. This therefore limits the number of customers they are able to serve and, by extension, the revenue they can bring in.
“The new measures announced by the Government will hopefully deter larger businesses from delaying supplier payments and also enable small businesses to decide whether they want to provide their products and services to late payers.”
‘Big companies riding roughshod’
Meanwhile, Chris Burgess, chairman of FSB Merseyside, West Cheshire and Wigan, said: “There is a real danger that we are creating a business culture in the UK where it is acceptable not to pay SMEs on time.
“All too often large companies ride roughshod over their small suppliers by not paying them on time or in full, which has a chilling effect right across the economy. It’s distressing to hear from our members that, in 2016, the average value of each late payment now stands at £6,142.
“Small businesses have to run a tight ship as far as their cash flow is concerned as they struggle with increasing business costs and an uncertain domestic economy. They should not also have to struggle with the stress, time and money required to chase overdue payments from big businesses.”