Government issues new SME payment measures for big businesses
12th December 2016 | News
The UK Government has announced new payment measures designed to increase transparency over payments from big businesses to smaller firms.
From April 2017, large businesses and Limited Liability Partnerships (LLPs) will be required to submit details on the average time taken to pay supplier invoices twice yearly.
Small Business Minister, Margot James, announced the new ‘Duty to Report’ rules late last week, with the Government set to formally publish guidance on compliance in the New Year.
“Unfair payment practices and unnecessary red tape hamper [SMEs'] ability to grow and have no place in an economy that works for all,” said James.
“By shining a light on how large businesses pay their smaller suppliers, we want to empower small businesses and drive a real change in payment culture.”
As of June 2015, the combined figure of late payments owed to small and medium-sized enterprises (SMEs) amounted to £26.8bn, with almost a third (30%) of all payments to SMEs made late, according to new research by theFSB.
Mike Cherry, National Chairman of the FSB, said: “Tackling late payments is now a key part of the Government’s corporate governance agenda.
“The comprehensive and regular Duty to Report is the first step to combat a business culture that feels like one where it is OK to pay small firms late.
“It is not OK – we estimate that 50,000 business deaths could be avoided every year, if only payments were made promptly – adding £2.5bn to the UK economy.”
Philip King, Chief Executive of the Chartered Institute of Credit Management (CICM), is delighted to see the Small Business Minister “engage with and listen to” organisations like CICM and the FSB in an effort to “drive real change”.
“The new Duty to Report will lead to much greater transparency and is clearly one of a suite of measures to improve payment practices, including the Prompt Payment Code, the appointment of a new Small Business Commissioner, and first and foremost, best-practice credit management,” added King.