FSB publishes report on Late Payments
Thursday 23rd March, 2023
The Federation of Small Businesses (FSB) has released a report called, Time is Money: The Case for Late Payment Reform. The report exposes the insufficient measures in place to hold big businesses to account and calls for a level playing field for smaller firms, according to the FSB.
This comes alongside a Department for Business and Trade (DBT) prompt payment and cash flow review, which ends in Spring, and looks at improving arrangements to support small businesses experiencing difficult payment practices.
Findings include on average through 2022, quarter-on-quarter:
• 52% experienced late payment.
• 25% reported increased late payment.
• The most affected sectors include education, construction, administrative, professional, scientific, transportation, IT, arts and human health and social work.
• Small businesses in south-east and east of England, and Northern Ireland were more likely to experience late payments.
The report also contains proposals for the Government, including:
• Give audit committees of large firms oversight of payment practices
and reporting on progress in their annual report.
• Impose 30-day payment terms, which should be
a maximum throughout supply chains.
• Mandate the Small Business Commissioner to investigate potential
instances of poor payment proactively
• Make the Prompt Payment Code (PPC) mandatory for all local authorities.
FSB Policy Chair Tina McKenzie said: “Small firms are already being stretched beyond their limits with rising energy bills, rampant inflation, and a mounting cost of living crisis. Cash flow is already tight, and that is compounded by being kept waiting months for invoices to be paid, which a serious roadblock to growth and investment. This also hinders productivity due to the excessive time and effort expended on chasing late payments. It’s a double whammy that is stifling business success, and in turn holding back the UK’s economic recovery – but is something that’s entirely avoidable.