The small business minister, Margot James, has set out further government plans to introduce better payment reporting rules between larger UK businesses and smaller suppliers.
In new measures to increase transparency and tackle late payment culture, larger UK firms will, from April 2017, have to publish twice annually details about the average time taken to pay the invoices of smaller suppliers.
This “duty to report” will, according to James, help to identify the worst late payment practices and improve standards across the UK economy.
A draft regulation, released on 2 December by James’ office at the Department for Business, Energy & Industrial Strategy (BEIS), outlined that payment reporting rules would mean that larger UK firms and limited liability partnerships (LLPs) will be required to publicly report twice a year on payment performance.
In a statement, James said: “By shining a light on how large businesses pay their smaller suppliers, we want to empower small businesses and drive a real change in payment culture.”
The new payment reporting rules are part of a package of government measures James has brought forward to tackle late payments, among which is a pledge to appoint an individual to the long-awaited role of small business commissioner in Autumn 2017. The specific purpose of the commissioner’s office will be to represent the interests of small businesses in payment disputes with larger companies.
“I want to thank the individuals and business groups who have responded to the consultation and helped shape this policy,” James added.
“Unfair payment practices and unnecessary red tape hamper the ability [of small suppliers] to grow and have no place in an economy that works for all.”
The government has promised to send out further guidance on how companies can comply with the duty to report in early 2017, to help larger firms prepare for the new rules.
Welcoming the news, national chairman of the Federation of Small Businesses (FSB), Mike Cherry, reiterated how damaging late payment culture is for the UK’s smallest businesses.
“We estimate that 50,000 business deaths could be avoided every year, if only payments were made promptly,” Cherry said in a statement.
“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 need to see executive board level engagement and scrutiny of payment practices to deliver lasting cultural change,” he concluded.
Margot James reaffirms government commitments to combat late payments
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