More government proposals on late payment
We’ve reported in previous issues on the various measures aimed at reducing late payment of commercial debts – mainly the right to charge interest and the requirement for large organisations to provide payment data for publication – and how ineffective they have been.
The Government recognises that late payment remains a huge issue, especially for small businesses and in June 2019 announced a consultation on a further package of measures under the auspices of the Office of the Small Business Commissioner.
The proposals include giving the Small Business Commissioner the right to impose financial penalties and binding payment plans on large businesses found to engage in unfair payment practices and to prosecute them for failing to comply with their duty to report on their payment practices.
Other measures proposed include holding company boards accountable for supply chain payment practices (requiring audit committees to report payment practices in annual reports) and a competition of up to £1 million in funding to encourage businesses to use technology to simplify invoicing, payment and credit management.
The Small Business Commissioner’s Office was set up by the Government in 2017 specifically to tackle the issue of late payment affecting small businesses. It is said to have already recovered over £3.8 million.
Late payment of commercial debts has been a perennial problem especially for small businesses – it impacts on cashflow and is said to damage SME productivity and growth. It remains to be seen if provisions such as those proposed will address the issues.Back to Our Thinking →