New fines and investigatory powers will help stamp out late payments, says Government

The Small Business Commissioner (SBC) will be given extra powers to help small businesses get paid on time, it has been announced.
The proposals, which include new fines and forcing non-compliant to share more data, come after recent research revealed that £23.4 billion worth of late payments are currently owed to small businesses in the UK.
Under the plans, the regulator in charge of supporting small businesses with late invoices will be handed a raft of new powers, including:

  • The power to order companies to pay their suppliers when a complaint against them for late payment has been investigated and upheld
  • The power to fine companies who continue to breach the rules
  • The power to “compel companies to share information during an investigation by the SBC”
  • the power to launch investigations into suspected bad payment practice, without the need to have first received a complaint from a small business.

Commenting on the measures, Small Business Minister Paul Scully said the Government is “seeking to create a culture of prompt payment in UK business”.
“Late payments are a terrible burden for small businesses, not only disrupting their cash flow but posing a threat to their survival in many cases,” he said. “We are committed to tackling this problem, supporting small businesses at this critical time for the British economy by helping them to secure payment on time.”
Welcoming the plans, National Chairman of the Federation of Small Businesses (FSB) Mike Cherry added: “We know that paying small businesses late is debilitating, and the practice has increased during COVID-19. It deprives small firms of cashflow, holds back growth, undermines productivity and forces many to take out external finance.
“In thousands of cases a year this causes the closure of small businesses. It is therefore more important than ever to wipe out this poor payment scourge. The proposed new powers would give the Small Business Commissioner some teeth to investigate bad practice more easily and punish it more severely, and it is very welcome to see these plans being put forward for consultation.”
The proposals follow news that the Prompt Payment Code – the set of guidelines designed to stamp out late payments – would be reformed to better support small businesses.
Announcing the reforms, a Department for Business, Energy and Industrial Strategy spokesperson said: “Whilst we believe these remain important principles, we also believe that reform could improve the Code.”
For help and advice dealing with late payments, please get in touch with our expert team today.

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