New plans to protect businesses against late payments
The government is considering new powers to give businesses more protection against late payment of invoices.
Figures provided by Pay UK show that £23.4 billion worth of late invoices are owed to small firms across Britain, impacting on their cash flow and ultimate survival.
Small Business Minister Paul Scully has announced a new set of proposals to ensure these firms are paid on time.
The proposals, which would give new powers to the Small Business Commissioner (SBC), are being put to public consultation. They include:
- the power to order companies to pay their partners, either as a lump sum or agreed payment plan, when a complaint against them for late payment has been investigated and upheld. Companies that do not do so could face further penalties, including fines.
- the power to compel companies to share information during an investigation by the SBC. This will ensure cooperation with SBC investigations and provide more information about company payment practices.
- the power to launch investigations into suspected bad payment practice, without the need to have first received a complaint from a small business.
- expanding the scope for complaints to the SBC, to allow the commissioner to investigate complaints about other businesses relating to payment matters in connection with the supply of goods and services.
- to review and report on wider business practices outside of payment matters. This could be practices unrelated to payment matters specifically impacting small businesses such as supply problems, or broader issues like barriers to the adoption of payment technology.
- the power to claim investigation costs from an investigated company when there are adverse findings against them.
Small Business Minister Paul Scully said: “Late payments are a terrible burden for small businesses, not only disrupting their cash flow but posing a threat to their survival in many cases. We are committed to tackling this problem, supporting small businesses at this critical time for the British economy by helping them to secure payment on time.”
The consultation runs until 24 December 2020. Businesses are invited to share their views here.
We shall keep clients informed of developments.
Please contact Neil O'Callaghan if you would like advice about credit control and debt collection.