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 that were recently unveiled by Small Business Minister Kelly Tolhurst.
Those measures are to include;
- Proposed new powers for the Small Business Commissioner to tackle late payments through fines and binding payment plans.
- Company boards to be held accountable for supply chain payment practices for the first time.
- A new fund is to be set up, to encourage businesses to use technology to simplify invoicing, payment and credit management.
By making the company boards accountable for supply chain payment practices to small businesses, they hope that it will increase transparency and reduce late payments. These measures would force audit committees to report payment practices in company annual reports.
The government will 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.
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.
Responsibility of the voluntary code of best practice – the Prompt Payment Code – will be moved to the Small Business Commissioner.
This will put tools to tackle late payment under one organisation, ensuring the Commissioner has the powers to affect culture change in unfair payment practices.
Small Business Minister Kelly Tolhurst said:
“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.”
Philip King, Chief Executive of the Chartered Institute of Credit Management said:
“This ambitious package of measures will level the playing field for the UK’s 5.7 million small businesses, delivering on the modern Industrial Strategy’s ambition to make Britain the best place to start and grow a business. Ending the culture of late payments will pave the way to boost SME productivity, remove barriers to growth and improve cash flow.”
If you would like to discuss supplier finance, allowing you to take control of your supply chain by providing your suppliers with access to early payment against their invoices, then The Funding Store can assist.
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