Have Your View On Action On Late Payments

An empty wallet

A consultation has been launched looking at ways small businesses can take action on late payers - with the  Small Business Commissioner able to issue fines against those who don't pay their bills on time.

The government has made proposals to give more powers to the Small Business Commissioner (SBC) and this is now subject to a public consultation running until Christmas Eve. Unfortunately the powers will only extend to business to business cases.

Other proposed powers include allowing the SBC to order businesses to pay in good time and ordering companies to share information on payment practices. The SBC would also have the power to launch investigations.

 

£23.4 billion problem

There are £23.4 billion worth of late payments currently owed to small businesses in the UK, impacting on cash flow and threatening the survival of small firms during the Covid-19 pandemic. The new proposals have been outlined by Small Business Minister Paul Scully. He said: The SBC should have the power to order companies to pay their partners, either as a lump sum or agreed payment plan, when a complaint against them for late payment has been investigated and upheld. Companies which do not do so could face further penalties, including fines. This will give a clear incentive for companies to pay their partners on time.

"The power to compel companies to share information during an investigation by the SBC will ensure cooperation with SBC investigations and provide more information about company payment practices.

"The power to launch investigations into suspected bad payment practice, without the need to have first received a complaint from a small business will expand the scope of the SBC to allow the Commissioner to investigate complaints about other businesses relating to payment matters in connection with the supply of goods and services."

 

Culture of prompt payment

The government is seeking to create a culture of prompt payment in UK business. This is essential to enable small businesses to succeed, creating jobs, driving innovation and supporting their community.

Minister Scully continued: “Late payments are a terrible burden for small businesses, not only disrupting their cash flow but posing a threat to their survival in many cases. We are committed to tackling this problem, supporting small businesses at this critical time for the British economy by helping them to secure payment on time."

 

What they said

Karen Woolven, owner of Karen Woolven flowers in Greenwich, London, said: “There is more than enough to worry about when running a small business without having to spend hours chasing up invoices for services that have already been delivered. I have experienced late payment multiple times in the recent past and it’s a huge problem which causes a lot of unnecessary uncertainty and stress.

"The Small Business Commissioner really helped us to resolve a dispute over this and it makes a lot of sense to give them more powers to sort these issues out. I’m glad to see some action to help small businesses like mine, especially at a challenging time like this.”

 

David Nichols, UK Chief Claims Officer at Zurich said:

“These are testing times for businesses and now more than ever, meeting payment terms on time is imperative for their survival. We fully support the expansion of the commissioner’s powers which will not only help raise awareness of the challenges this creates for businesses, it will also serve to find a resolve far quicker.”

 

National Chairman of the Federation of Small Businesses Mike Cherry said:

“We know that paying small businesses late is debilitating, and the practice has increased during Covid-19. It deprives small firms of cashflow, holds back growth, undermines productivity and forces many to take out external finance. In thousands of cases a year this causes the closure of small businesses. It is therefore more important than ever to wipe out this poor payment scourge. The proposed new powers would give the Small Business Commissioner some teeth to investigate bad practice more easily and punish it more severely, and it is very welcome to see these plans being put forward for consultation.”

According to the Federation of Small Businesses, around 50,000 small companies close each year due to late payments.

 

Consultation

The consultation opened on October 1 and will run until 24 December 2020. To share your views - Click Here

 

Picture: What's in your wallet? Not a lot if bad payers keep your cash.

 

Article written by Cathryn Ellis
09th October 2020

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