Business Minister Matthew Hancock has revealed new proposals to help SMEs avoid late payers, giving them the opportunity to compare the payment practices of large businesses.
All large and listed businesses will have to report quarterly and publish details of their payment procedures, including information about the average pay time and the proportion of invoices paid beyond terms.
For small companies, late payment can put immense pressure on cashflow, therefore these proposals are a welcoming change. SMEs will be able to choose their customers by how good they are at paying on time, with the hope that future late payments can be avoided.
These proposals are part of the Small Business, Enterprise and Employment Bill which is currently going through parliament.
Hancock said, “Tackling late payment is at the heart of our drive to help small businesses. Coming from a small business background, I know just how critical late payment can be for small firms’ cashflow. We know that small businesses are often reluctant to risk losing business by using the redress measures we’ve put in place, so we want to tackle the underlying culture by increasing transparency on payment practices and performance.”
"The measures we are consulting on will make it clear to small businesses and consumers alike which large businesses behave properly, and those that think they can ride roughshod over their suppliers.”
The consultation paper (‘Duty to Report on Payment Practices and Policies’) has been published here on the government website. If you wish to respond, you can email firstname.lastname@example.org using the subject line ‘Duty to Report Consultation’.