Entrepreneurs say ‘enough is enough’ as late payment crisis worsens
THE FEDERATION of Small Businesses has released a report uncovering “the true scale” of damage caused by late payments.
Time is Money: The Case for Late Payment Reform, exposes insufficient measures in place to hold big businesses to account, or to level the playing field for smaller firms.
This coincides with a prompt-payment and cashflow review by the Department for Business and Trade (DBT), which looks at improving support for small businesses with payment difficulties.
On average through 2022, quarter-on-quarter, 52 percent of those canvassed experienced late payment — and 25 percent reported that the problem had increased. The most-affected sectors are education, construction, administration, science, transport, IT, the arts, healthcare, and social work.
“Enough is enough,” said FSB policy chair Tina McKenzie. “Late payments in the UK have continued to spiral out of control, while since 2019 Ministers lost the momentum and enthusiasm to make a difference.” More than half (55 percent) of the British public would support more controls.
Of the study respondents, 37 percent had applied for credit to manage their cashflow, and 62 percent said businesses should be paid within a week.
Time is Money contains proposals:
- Give audit committees of large firms oversight of payment practices and reporting on progress in their annual report.
- Publicly commit to limit the maximum payment terms to small suppliers in law by 2027 if the situation does not improve.
- Bar late payers from public procurement contracts and impose a 30-day maximum in supply chains.
- Mandate the investigation of instances proactively, not only when a complaint has been made.
- Make the Prompt-Payment Code (PPC) mandatory for all local authorities.
- Create a new local authorities Payment Practice League Table with financial incentives for those at the top and bottom for England.
“We now need to reinvigorate this agenda, and to push for growth and productivity. The best way to do this is to sort out the UK’s poor payment culture…
“Big businesses shouldn’t be using small firms as a bank. It’s time for them, too, to step up and take responsibility.”