Thursday 20th June, 2019
The government will consult on strengthening the powers of the Small Business Commissioner to hold to account the minority of larger businesses who fail to make payments on time. New powers could include compelling information and disclosure of payment terms and practices, imposing financial penalties or binding payment plans on large businesses found to have unfair payment practices.
Company boards will now be held accountable for payment practices to small businesses within their companies in a drive to increase transparency and accountability on late payments. Measures will force Audit Committees to report payment practices in company annual reports.
The responsibility of the Prompt Payment Code will be moved to the Small Business Commissioner to ensure effective culture change in unfair payment practices under one organisation.
Philip King, Chief Executive of the Chartered Institute of Credit Management discussed these measures along with guidelines for prompt payment during this morning's PPN webinar, you can view the recording here.
Small Business Minister Kelly Tolhurst said: “The vast majority of businesses pay their bills on time, with the amount owed in late payments halved over the last five years. But as a former small business owner, I know the huge impact a late payment can have on the ability of a small business to plan, invest and 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.”
Philip King, Chief Executive of the Chartered Institute of Credit Management said: “We will continue to work closely with the Commissioner and the government in supporting small businesses and driving cultural change and look forward to engaging with existing signatories and wider stakeholders in shaping the best practice principles of the future.”
Other proposals include:
A tough new approach to large companies which do not comply with the Payment Practices Reporting Duty – an existing mandatory requirement on large businesses to report payment practice to a national database twice a year. The legislation allows for the prosecution of those which do not comply, and fines may be imposed.
A Business Basics Fund competition of up to £1 million in funding to encourage businesses to use technology to simplify invoicing, payment and credit management to ensure they work as effectively as possible.