However, according to Know-it, a cloud-based credit management platform, while the changes are welcome and will provide the small and medium-sized enterprise (SME) sector with some much-needed support, more is needed to unravel the culture of late payments across the supply chain.
The new proposals would see the Small Business Commissioner (SBC) having the authority to order companies to pay their suppliers, either as a lump sum or agreed payment plan, when a complaint against them for late payment has been investigated and eventually upheld. The goal is to help put small businesses in the situation they would have been in had they been paid the full amount on time, while the companies that failed to comply would now face further penalties and fines.
The SBC would also have the power to compel companies to share information during any investigation, as well as launch investigations into suspected bad payment practice, without receiving a complaint from a small business.
According to the Federation of Small Businesses (FSB), around 50,000 small companies close each year due to late payments, with 62% having experienced late payment at some point or other. In a 2016 report, the FSB also estimated that if all payments were made on time there would be a £2.5bn boost to the British economy.
Robert Barnard, Client Services Principal at Lupton Fawcett, says “It might be the case that larger companies are likely to be named and shamed, In 2019, Holland and Barrett became the first big company to be named for paying its suppliers late, and coupled with the fact that the Conservative Party 2019 manifesto promised to clamp down on late payment, this will strengthen the SBC’s powers to help small businesses. However, whilst SME’s can charge interest on late payments, few will not wish to take this option for fear of upsetting their big clients and losing contracts.”
In these uncertain times where cash flow will be key, please be assured we are here to support you and claim back what is rightfully owed. Should you wish to contact us with regard to any outstanding Debt that you would like us to look at, please contact Robert Barnard on 0113 280 2146 or firstname.lastname@example.org
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.