Government consults on tackling late payment – Have your say

On 4th October, the Department for Business, Energy & Industrial Strategy (BEIS) published a call for evidence on creating a responsible payment culture. The Government’s Industrial Strategy is underpinned by an intention to make Britain the best place to start and grow a business. With 5.7 million small businesses in the UK, it’s a great foundation from which to grow. However, nearly a quarter of small businesses report that late payments are a threat to their survival, presenting a significant barrier in achieving the UK’s growth ambition. For consumers who want to pay on time, they can earn some money on sites such as 선시티카지노.

The Federation for Small Businesses (FSB) suggests that in tackling late payment issues, the UK stands to open up a huge opportunity for economic growth that could add £2.5 billion to the economy and keep an extra 50,000 businesses open each year. It’s clear that a fair approach to payment is vital for small businesses to thrive and continue to perform the important role they play as the backbone of UK industry.

Research to date has identified that:

• 50% of SME employers in the UK give their customers trade credit, rising to 56% within the construction sector
• Late payment is considered a problem for 55% of UK SMEs that offer trade credit
• The average time that large businesses take to pay after receiving an invoice is 37 days
• The main causes of late payment reported by business are: insufficient cash flow, imbalances of power between companies, supply chain structure, administrative inefficiencies and deliberate use of late payment as a means of financing
• 32% of SMEs report that late payments mean they pay their own suppliers late
• 25% state that they have to rely on their bank overdraft to compensate for late payers
• 15% struggle to pay salaries or business bills as a result of late payments
• Late payment is considered a major obstacle to business success within construction, a problem that is reported to have grown between 2016 and 2017 surveys

The Government’s call for evidence invites businesses of all size and sector to submit their views and experiences to help mitigate some of the issues surrounding late payment. Specifically, it seeks to understand the impacts and reasonings for particular payment practices and gather views on what can be done to better promote a responsible payment culture and provide an environment within which SMEs can flourish.

Proposals

Various proposals are being consulted upon, with businesses invited to contribute their opinion on each. Measures are split between those that have already been implemented and new initiatives for consideration.

Businesses are able to comment upon the effectiveness of existing measures, including statutory frameworks such as the Late Payment of Commercial Debts (Interest) Act 1998 and the 2000 EU Late Payment Directive, as well as ways in which adoption of the Prompt Payment Code can be improved.

Sector and trade bodies can play an important advisory role within the business communities in which they operate. BEIS is interested to understand business opinion on how these bodies can play a more crucial role going forward in engendering positive payment cultures.

Some of the new measures proposed consider how culture and behaviour can best be influenced; from boardroom accountability for payment performance to public pressure, reporting and positive role models. In addition, the consultation delves into finance options and how the British Business Bank can better inform the market to improve SME understanding of the alternatives available to help with long payment periods.

Public Sector to set an example

Public Sector is eager to act as a role model when it comes to tackling late payments. It has therefore stated an ambition to pay 90% of undisputed invoices to SMEs within 5 days, on central government contracts. A second consultation is underway via Crown Commercial Service, looking at further ways in which the Public Sector can strengthen commitment to SME businesses, specifically addressing the ways in which “Government should take account of a supplier’s approach to payment in the procurement of major contracts”.

Have your say

The consultation closes on 29^th November with respondents invited to submit their views either via the online portal or by e-mail.

The call for evidence is made up of a series of questions and SMEs are able to respond to as many or as few as they wish. Questions fall into three broad categories:

1. Existing payment practices and experiences
2. Existing measures to improve payment practices
3. New measures to improve payment practices

The consultation document itself, the questions and the online portal can all be accessed via the BEIS website.

Reliable payment is such an important feature of a smooth-running construction sector. We would encourage as many businesses as possible to get involved and have your say!