Industry leaders have welcomed the government’s announcement that it intends to crack down on bigger businesses which have poor payment practices towards their smaller suppliers and contractors.
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 unveiled by Small Business Minister Kelly Tolhurst.
The move makes company boards accountable for their supply chain payment practices for first time, increases the powers of the Small Business Commissioner to tackle late payments through fines and binding payment plans, and strengthens the Prompt Payment Code.
Small Business Minister Kelly Tolhurst comments: “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.
“Small businesses are the backbone of our economy and through our modern Industrial Strategy we want to ensure the UK is the best place to start and grow a business. These measures will ensure that small businesses are given the support they need and ensure that they get paid quickly – ending the unacceptable culture of late payment.”
Speaking in response, Federation of Small Businesses National Chairman Mike Cherry says: “Late payments and poor practices are a scourge which leads to the closure of 50,000 small businesses a year. These measures will for the first time see the culprits brought to account.
“Ending late payments and poor practices is not only the right and fair thing to do, it will also spare small firms the financial impact of waiting for the money they’re owed, and instead allow them to invest and grow.”
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