Currently, in the UK, late payments are a serious issue, especially for small/medium-sized enterprises (SMEs) who have to chase payments from large customers.
According to research conducted by Bacs Payment Schemes (Bacs), the costs SMEs face in collecting late payments are estimated to go up to £6.7 billion.
Over the past year, the Federation of Small Businesses (FSB) has been leading a campaign on the issue and is ramping up its calls for Government action.
In the Spring Statement 2019, the Chancellor announced plans to clamp down on late payments with a requirement for listed companies to report on their payment performance in the annual report and accounts.
“We need to tackle the scourge of late payments,” said Chancellor Philip Hammond.
“As a first step, we will require company audit committees to review payment practices and report on them in company accounts.”
Under Business Secretary, Greg Hands, the Department for Business, Energy and Industrial Strategy (BEIS) will lead the consultation and introduction of the new regulations for listed entries.
National Chairman of the FSB, Mike Cherry, said: “Small businesses are sick and tired of being left out of pocket by some unscrupulous big businesses taking advantage of this imbalance in power to improve their own balance sheets or mask their own financial failings.
“The commitment from the Chancellor that the Business Secretary will see this through is welcome, and we are especially pleased that the first measure has been announced – to make a Non-Executive Director responsible for the supply chain through the Audit Committee of every large business, and to report back through the Annual Report on their progress.”
Mr Cherry added: “The end of late payments could finally be in sight. It can’t come soon enough, to bolster small businesses at a time when they are in great need of support and a lift in confidence.”
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