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Dealing with late payments can place cash flow under serious stress, especially in smaller businesses. To counteract the effects, the government promised a crackdown on late payers.

New powers and responsibility

Minister for Small Business, Kelly Tolhurst, announced “a robust package of measures”, proposing that The Office of the Small Business Commissioner (SBC) be given new powers to tackle late payments.

This could include compelling the disclosure of payment terms and practices, and imposing financial penalties or payment plans on large businesses found to have unfair payment practices. It means that larger businesses will now be held to account for any failure to make timely payments.

The Prompt Payment Code

The SBC has also been given responsibility for the Prompt Payment Code (PPC). It’s designed to establish best practice for payment standards, and gives the Commissioner the tools needed to “affect culture change in unfair payment practices”.

Since its creation in 2017, the SBC has recovered over £3.8 million, so it does seem to be working. It gives small businesses (defined in this case as having less than 50 employees) an opportunity to complain about larger businesses who fail to pay them on time.

The complaints process is available through their website>

Payment accountability for company boards

Under the new measures, the entire company board assumes responsibility for transparent payment practices – regardless of ‘whose job it is’. Audit Committees will also be forced to report payment practices in company annual reports.

Large companies with a duty to report on payment practices and performance on a twice-yearly basis may be subject to prosecution and fines if found to be non-compliant.

Small business minister Kelly Tolhurst said that while the vast majority of businesses pay their bills on time, she appreciates the “huge impact” a late payment can have on a small business and its ability to grow.

“These measures will ensure that small businesses are given the support they need and ensure that they get paid quickly – ending the unacceptable culture of late payment.”

The Business Basics Fund

The Business Basics Fund is included in the measures, and supports projects which test new ways of stimulating productivity in small and medium sized businesses. Up to £1 million in funding is available to investigate technology which simplifies invoicing, payment and credit management.

Learn more here>

About The Author

Elizabeth Hughes

A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible. Learn more about Elizabeth.

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