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Good News for Small Business Owners in the UK

There’s some good news for small businesses here in the UK – the government proposes to start fining large businesses for failing to pay smaller suppliers in a timely manner.  In the government’s latest bid to tackle the problems faced by Britain’s SMEs (on which the UK economy depends), the announcement of a new package of measures to tackle the late payment culture will be welcomed by small businesses that supply these successful household names.  The government also plans to hold consultation sessions on strengthening the powers of the Small Business Commissioner to “hold to account” the larger businesses who fail to pay their suppliers on time. 

The new powers could include forcing companies to disclose their payments terms and practices, handing out financial penalties or binding payment plans on bigger firms that are found to follow unfair payment practices.  The Small Business Commissioner was established by the government in the 2016 Enterprise Act as pat of the government’s commitment to help small business with payment issues and provide them with services that will solve their payment issues.  The Small Business Commissioner, Paul Uppal, will take on responsibility for the Prompt Payment Code, enabling the Commissioner with the power to affect the culture change necessary to eradicate unfair payment practices.

With late payment responsible for the closure of up to 50,000 small businesses a year, this is a much-needed initiative that will hold larger companies to account – forcing large businesses to report their payment practices in their annual company reports. 

It’s long been considered that the late payment culture within larger organisations needs to change as it has a knock-on effect on so many of the small businesses and self-employed people who depend on a steady income to stay in business. 

For the first time, company boards will be held responsible for the supply chain payment practices, which should have a significant positive effect on so many suppliers here in Britain.  Forcing these larger companies to disclose their payment practices in annual reports should result in more intense scrutiny, leading to a cultural change within the bigger organisations.

So many smaller companies here in the UK are suppliers of goods or services to larger companies, and many of them are being held back from growing their businesses because they are reluctant to risk investing in their businesses unless they are sure of the steady cash flow necessary to balance the books.  This really is unacceptable, as any small business owner will know.  There is no excuse for big businesses delaying payments in this way – it’s usually the bigger companies that are quickest off the mark when it comes to recovering money owed to them. 

We’ll have more information on this issue in the coming months – so why not follow us on Facebook and Twitter to keep up to date with all the useful business news as it happens?