The UK’s Business Secretary, Vince Cable, is to announce plans to tackle the issue of late payments to UK businesses.
Mr Cable is expected to announce new legislation forcing businesses to publish their payment terms in a bid to “shame” them into changing their behaviour.
The Government will also be working closely with the Institute of Credit Management to try and refine the guidelines of the Prompt Payment Code – a voluntary set of conditions which more than 1,500 businesses have already signed.
Despite calls for harsher measures to tackle the problem of late payments – including on-the-spot fines for those who pay late – the Government is expected to refrain from implementing any such laws.
This is despite the results of a 2013 parliamentary enquiry which found that SMEs were owed more than £36bn in late payments alone.
Simon McVicker, director of policy and public affairs at PCG, a group which represents contractors and freelancers, said: “In order for it to be effective, the Prompt Payment Code must be compulsory for large companies and it must include sanctions for the worst offenders.
“We also need a system for small businesses to report offenders anonymously, so they are not compelled to jeopardise important client relationships by sticking their heads above the parapet.
“The reality is that the only way to ensure big companies pay up on time is to take direct legislative action.”
John Allan, national chairman of the Federation of Small Businesses (FSB), believes the crucial litmus test would be whether those signing up to the Prompt Payment Code actually begin to pay within a 60-day window.
“Late payment is no longer acceptable and is damaging growth and job creation,” said Mr Allan.
“Whether these measures go far enough without calling for a statutory code will be determined by how big companies respond to today’s announcement and change their culture.
“Small businesses can no longer be expected to lend interest free to large businesses.”
Image: The CBI
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