Government looks to introduce new powers to crack down on late payments to small businesses
The government has launched a consultation aimed at protecting small companies from late payments impacting their cash flow and, ultimately, their survival.
The consultation includes a range of proposals which would see the Small Business Commissioner (SBC) given more powers to help small firms tackle issues of late payments.
According to the government, there is currently £23.4 billion worth of late invoices owed to small businesses across Britain.
Small Business Minister Paul Scully confirmed on 1 October that the proposals outlined will aim to ensure small businesses are paid on time and create a culture of prompt payment across the UK.
The new Small Business Commissioner powers set out in the proposals include:
- 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
- the power to compel companies to share information during an investigation by the SBC to help the Commissioner acquire 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
- expanding the scope for complaints to 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
- to review and report on wider business practices outside of payment matters, on instruction of the BEIS Secretary of State. This could be a practice 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
“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,” commented Small Business Minister Paul Scully.
“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.”
According to the Federation of Small Businesses, around 50,000 small companies close each year due to late payments.
“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,” stated Mike Cherry, National Chairman of the Federation of Small Businesses.
“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.”
With the additional disruption of the coronavirus, the government added that it is now an urgent issue, with many companies’ survival hanging in the balance.
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 eight companies for poor payment practice.
The consultation opened on 1 October 2020 and will run until 24 December 2020.https://thiis.co.uk/government-looks-to-introduce-new-powers-to-crack-down-on-late-payments-to-small-businesses/https://i1.wp.com/thiis.co.uk/wp-content/uploads/2020/10/stress-man-paperwork.jpg?fit=900%2C575&ssl=1https://i1.wp.com/thiis.co.uk/wp-content/uploads/2020/10/stress-man-paperwork.jpg?resize=150%2C150&ssl=1Business SupportCoronavirus NewsCOVID-19 Sector NewsCOVID-19 Trade NewsGovernment & Local AuthoritiesNewsroomSector NewsBEIS Secretary of State,Federation of Small Businesses,FSB,Government,invoices,late payments,Paul Scully,SBC,Small Business Commissioner,Small Business MinisterThe government has launched a consultation aimed at protecting small companies from late payments impacting their cash flow and, ultimately, their survival.The consultation includes a range of proposals which would see the Small Business Commissioner (SBC) given more powers to help small firms tackle issues of late payments.According to...Calvin BarnettCalvin Barnettcalvin@thiis.co.ukAdministratorTHIIS Magazine