By Ben Kerrigan-
New proposals have been outlined by the British government to ensure small businesses in the UK are paid on time, Small Business Minister Paul Scully today announced.
Currently £23.4 billion worth of late invoices are owed to small firms across Britain, impacting on businesses’ cash flow and ultimate survival.
Today’s proposals, as part of a new consultation launched today, look to give new powers to the Small Business Commissioner including:
Companies that flout the rules 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.
This will ensure cooperation with SBC investigations and provide more information about company payment practices, and empower them to launch investigations into suspected bad payment practice.
It will enable the Commissioner to investigate complaints about other businesses relating to payment matters in connection with the supply of goods and services to review and report on wider business practices outside of payment matters, on instruction of the BEIS Secretary of State.
This could be practices unrelated to payment matters specifically impacting small businesses such as supply problems, or broader issues like barriers to the adoption of payment technology the power to claim investigation costs from an investigated company when there are adverse findings against them.
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.
Small Business Minister Paul Scully said:
”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.
I am pleased to open this consultation on expanding the Commissioner’s powers and welcome the views of businesses that have been affected by this issue.
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 (FSB) 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.
The proposed new powers will give the Small Business Commissioner some teeth to investigate bad practice more easily and punish it more severely.
The Office of the Small Business Commissioner was established in 2017 by the previous government to address the issue of late payments. Since then, the SBC has claimed £7.5 million owed to small businesses and publicly named 8 companies for poor payment practice.