The Government has announced new measures to ensure that small businesses get paid on time.
The new rules will see large businesses fined for the first time for failing to pay smaller suppliers on time as part of a package of measures announced by Small Business Minister Kelly Tolhurst.
Board members will now be held accountable for poor payment practices which involve smaller businesses in a bid to increase transparency and accountability on late payments, with the measures forcing payment practices to be reported as part of a company’s annual reports.
The Small Business Commissioner’s Office will be given more powers so that they are able to hold to account those larger businesses who fail to make payments on time. Powers that are being considered include; forcing disclosure of payment terms and practices, imposing financial penalties and binding payment plans on large businesses found to have unfair payment practices.
Whilst responsibility for the Prompt Payment Code, the voluntary code of best practice, will also be moved to the Small Business Commissioner, in a move that will see all the tools needed to tackle late payments moved under one organisation with the Commissioner overseeing moves to change the culture surrounding late payments.
Small Business Minister Kelly Tolhurst said: “Small businesses are the backbone of our economy and through our modern Industrial Strategy we want to ensure the UK is the best place to start and grow a business.
“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.