Tax & admin · 8 January 2019

Worst offenders to be named and shamed under new late payment system

late payment
The average small UK business owner is allegedly owed 24, 841 in late payments
New proposals could expose large businesses that fail to pay suppliers on time, helping small business owners avoid doing business with repeat offenders.

Under a new traffic light? system, recommended by small business commissioner Paul Uppal, smaller firms will be warned which businesses have a poor record of paying suppliers on time, and those likely to set longer payment terms.

Uppal’s plans would allow smaller suppliers to make informed decisions on who they do business with, as further moves to improve the late payment problem get underway.

Late payment facts

? 2.5bn lost to economy annually
? Average small business owed 24, 841
? Causes 50, 000 businesses to fold each year
? End to late payments could create 3.4m jobs

Since 2017, large companies have been required to report supplier payment records twice a year, but the late payment problem continues to plague micro businesses and the self-employed.

A recent study of two million invoices revealed that the average small UK business owner is owed 24, 841 in late payments on any given day.

Late payments worth almost 25, 000 equate to£11 months? average staff wage, 37 months of mortgage paymentsornine family holidays. Meanwhile, around 50, 000 small businesses fold every year because of cash flow problems.

Traffic light system

The payment data collected by government will be used to flag businesses with a poor record, with a red flag alerting them to suppliers. Companies which fail to report payment practices will also receive a red light.

From Autumn 2019, the government has said it will only award public contracts to companies that can demonstrate prompt payment to their own suppliers.

The programme could bolster Uppal’s reputation within the small business community, following a quiet 15 months since his appointment. The commissioner currently lacks the authority to distribute late payment fines, and Uppal only managed to recover 2.1m in unpaid invoices on behalf of small business owners in his first year in office.

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late payment

 

Named and shamed: 35 worst offending late payers and the crippling impact on small businesses

Business Advice rounds up the 35 worst offending businesses for late payments and explains what to do if you’re owed payment.

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Proposals for a traffic light system arrive as new survey findings reveal overwhelming? support among MPs for late payment reform.


 
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ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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