7 February 2017 13:45
Late payment law could save thousands of SMEs
The Government has published new guidance to help large businesses report on how quickly they pay their suppliers in order to protect SMEs from late payments.
The latest Government figures show that SMEs are owed £26.3 billion in overdue payments.
From April 2017, large companies and limited liability partnerships (LLPs) will have to publically report twice a year on their payment practices and performance, including the average time taken to pay supplier invoices.
The new regulations are intended to improve transparency and help small businesses make informed decisions about who they do business with. Failure to report will be a criminal offence; the new guidance published this week outlines the new responsibilities.
Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), said:
"We estimate that if payments were made promptly, 50,000 business deaths could be avoided every year, adding £2.5 billion to the UK economy. It's now crucial that these regulations are introduced and robustly enforced with proper sanctions put in place for any large business that tries to hide its payment practices."
Small Business Minister Margot James said:
"It's completely unacceptable that small and medium-sized businesses are owed £26.3 billion in late payments, which hampers their ability to grow and has no place in an economy that works for all. Large businesses have an important role to play and the guidance published today will help them fulfil their responsibilities and improve payment practices across the board."
Jacqueline de Rojas, Managing Director of UK, Ireland and Northern Europe at Sage, said:
"Our small business customers across the country tell us that late payment is still one of their biggest barriers to competing with larger suppliers. We know it impacts their ability to invest and innovate. This is a welcome move in the right direction to creating a stronger, fairer economy and making the UK the best place to start and run a business."