Late payment reporting ‘will help small businesses prosper’
The government is pressing ahead with its plans to make large businesses report on how quickly they pay their suppliers.
Ministers believe the move will help smaller firms to grow and prosper. It comes as the latest figures show that SMEs are owed £26.3 billion in overdue invoices.
From April this year, 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.
Failure to report will be a criminal offence.
The Department for Business, Energy and Industrial Strategy has published guidance on how the new regime will work. You can see it here https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/587465/payment-practices-performance-reporting-requirements.pdf
The requirement to report will apply to companies that meet certain criteria such as having more than 250 employees, £36m annual turnover or an £18m balance sheet total. Companies don’t have to fulfil all of these conditions to be affected.
Small Business Minister Margot James said: “The UK is home to a record 5.5 million small businesses and the industrial strategy will help address many of the challenges they face getting finance and scaling up. 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 we’ve published will help them fulfil their responsibilities and improve payment practices across the board.”
The government is also pressing ahead with the appointment of a Small Business Commissioner to support small businesses in resolving payment disputes. The Commissioner’s office is expected to be up and running later in the year.
Recent findings from the payment processor Bacs report that nearly half of the UK’s small-to-medium sized businesses experience late payment, with £26.3 billion owed to them in total.
Please contact Neil O’Callaghan if you would like help with credit control and debt collection.