Tax & admin · 26 July 2015

Government announces small business commissioner for late payment problem

Small businesses are owed £26bn in late payments
Small businesses are owed £26bn in late payments

The Conservatives have confirmed the introduction of a new small business commissioner to help prompt a culture change regarding how small business disputes with larger companies are resolved.

The person given the role will help small businesses handle disputes over late payment and other supply chain practices that hit them particularly hard. The commissioner will also help smaller firms access advice, support, mediation and conciliation services in order to develop awareness and knowledge about their capabilities. They will also have the power to look into complaints and report on its findings.

The Conservatives said not only would this deliver on a pledge to deliver a small business conciliation services, but also went further in an effort to tackle the “unacceptable payment practices that hit small firms”.

Small business minister Anna Soubry said: “The government is backing small businesses to grow and create more jobs and opportunity.”

She pointed out that these firms “are owed £26bn in late payments and spend millions more chasing down money already earned through hard work”.

The current state was “simply unacceptable – it limits their growth and productivity and can put an otherwise successful business at risk”, Soubry explained.

Anna Soubry speaking at the launch of Small Business Saturday 2015
Anna Soubry speaking at the launch of Small Business Saturday 2015

“The small business commissioner will tackle the imbalance of bargaining power between small suppliers and large customers, and encourage them to get round the table and sort out disputes at a fraction of the cost going to court,” she added.

“It will also provide advice, investigate complaints and see where further action is needed to clamp down on unfair practices.”

The government said this would be just one of several new measures introduced to address the issue of late payment. An FSB survey of members in 2014 found that 51 per cent had experienced late payment within the previous 12 months.

The Small Business, Enterprise and Employment Act 2015 made compulsory a requirement for the UK’s largest companies to report on their payment policies and practices.

The commissioner will be able to use this data to “name and shame those behaving badly”, while also celebrating those leading the way by paying promptly. To get the ball rolling, the Conservatives have published a discussion paper and are asking businesses for views on the proposals – which closes on 21 August 2015.

Soubry said she wants to “hear from businesses of all sizes”, as the best results would come about by “everyone working together on this”.

A similar position set up in Australia, with a Victoria small business commissioner introduced, found that over half of the cases handled were successfully resolved at 30 per cent (or less) the cost of taking legal action. Over half the complaints were resolved within one week and 80 per cent within 12 weeks.

Image: Shutterstock

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Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.

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