Government refreshes plans for tougher late payment laws
A new government release has reiterated its commitment to introduce the long-awaited tougher payment reporting laws, now due to take effect from April 2017.
The report follows the fourth annual Small Business Saturday – a grassroots, independent and not-for-profit initiative championing small business in the UK – and states how a number of steps will be taken to eliminate late payment culture from large businesses to their suppliers.
It includes a requirement for large businesses to publish details twice a year on the average time taken to pay supplier invoices.
Having been hotly anticipated for a while now, after initially being planned to come into effect in April 2016, small business owners should be pleased to hear this is still going ahead and firmly at the forefront of government plans for the new year.
The measures also include:
- The appointment of the Small Business Commissioner from Autumn 2017, supporting small businesses in resolving payment disputes
- £10 billion worth of savings made from unnecessary regulation currently hampering growth, starting with extending the ‘Business Impact Target’ and Growth Duty strategy
Small Business Minister Margot James has said:
“This government will be celebrating the UK’s record number of small businesses, which are creating jobs and supporting local communities. Unfair payment practices and unnecessary red tape hamper their ability to grow; and by shining a light on how large businesses pay their smaller suppliers, we want to empower SMEs and drive a real change in payment culture.”
The government is due to release a guidance document on how to comply with the duty to report early in 2017, to assist with large business preparation.
Mike Cherry, National Chairman of the Federation of Small Businesses, spoke of the importance of this move:
“The comprehensive and regular duty to report is the first step to combat a business culture that feels like one where it is OK to pay small firms late.
“It is not OK – we estimate that 50,000 business deaths could be avoided every year, if only payments were made promptly – adding £2.5 billion to the UK economy. We need to see executive board level engagement and scrutiny of payment practices to deliver lasting cultural change.”
These changes will undoubtedly be welcomed by UK SME owners, but questions will remain over why it has taken so long to implement having first been announced in March 2015.
We’d like to hear your views on this. Do you think it’s a good move by the government, and will the reporting help you to make an educated decision over who you provide your goods and services to? Please share your views in the comments section below.