For the first time large businesses could be fined for failing to pay smaller suppliers on time as part of a robust package of measures unveiled recently by Small Business Minister Kelly Tolhurst.
Company boards will now be held accountable for payment practices to small businesses within their companies in a drive to increase transparency and accountability on late payments. Measures will force Audit Committees to report payment practices in company annual reports.
The government will consult on strengthening the powers of the Small Business Commissioner to hold to account the minority of larger businesses who fail to make payments on time. New powers could include compelling information and disclosure of payment terms and practices, imposing financial penalties or binding payment plans on large businesses found to have unfair payment practices.
Responsibility of the voluntary code of best practice – the Prompt Payment Code – will be moved to the Small Business Commissioner. This will put tools to tackle late payment under one organisation, ensuring the Commissioner has the powers to affect culture change in unfair payment practices.
Other proposals include:
A tough new approach to large companies which do not comply with the Payment Practices Reporting Duty – an existing mandatory requirement on large businesses to report payment practice to a national database twice a year. The legislation allows for the prosecution of those which do not comply, and fines may be imposed. The government will consult on giving these powers to the Small Business Commissioner.
A Business Basics Fund competition of up to £1 million in funding to encourage businesses to use technology to simplify invoicing, payment and credit management to ensure they work as effectively as possible.
For full article visit https://www.gov.uk/government/news/broad-new-measures-to-ensure-small-businesses-get-paid-on-time