IPSE welcomes new measures to end late payment
- 19 Jun 2019
The Department for Business, Energy, and Industrial Strategy has today announced that for the first time, large businesses could be fined for failing to pay smaller suppliers on time.
IPSE research has found that two thirds of the self-employed have suffered from late payment, and they have lost an average of 20-days a year chasing delayed client payments.
After a consultation on late payment, the Department for Business, Energy and Industrial Strategy announced today that it would introduce new measures to improve payment culture. These include:
- Proposed new powers for the Small Business Commissioner to tackle late payments through fines and binding payment plans.
- Company boards to be held accountable for supply chain payment practices for first time.
- New fund to encourage businesses to use technology to simplify invoicing, payment and credit management.
The Department also propose to give new powers to the Small Business Commissioner, which include compelling information and disclosure of payment terms and practices, and imposing financial penalties and binding payment plans on large businesses found to have unfair payment practices.
Another suggestion is to move the voluntary code of best practice – the Prompt Payment Code – to the Small Business Commissioner. According to BEIS, this will put all the tools needed to tackle late payment under one organization, ensuring the Commissioner has the powers to affect culture change in unfair payment practices.
Other proposals in the report include a new fund to encourage businesses to use technology to simplify invoicing, payment and credit management. There is also the suggestion of a Business Basics Fund competition of up to £1 million in funding to encourage businesses to use technology to simplify invoicing, payment and credit management to ensure they work as effectively as possible.
Tolhust said: “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.
“Small businesses are the backbone of our economy and through our modern Industrial Strategy we want the ensure the UK is the best place to start and grow a business. 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.”
Andy Chamberlain, Deputy Director of Policy at IPSE said:
“The late payment culture that so many big businesses get away with needs to change. For the two thirds of self-employed people who experience it, late payment means no income, empty bank accounts, debt and possibly destitution. Today’s announcement is a welcome step in the right direction.”
Read the full response to the consultation here.
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