Government unveils new proposals to tackle late payment
02 Dec 2014
New proposals obliging large and listed companies to publish detailed information about their payment practices and performance have been unveiled by the Business Minister Matthew Hancock.
The proposed changes, published in a consultation paper “Duty to Report on Payment Practices and Policies”, are designed to make it easier for small businesses to compare the payment practices of different companies, including their average payment time and the proportion of invoices that are paid beyond terms.
Business Minister Matthew Hancock said: ‘Tackling late payment is at the heart of our drive to help small businesses. Coming from a small business background, I know just how critical late payment can be for small firms’ cashflow. We know that small businesses are often reluctant to risk losing business by using the redress measures we’ve put in place, so we want to tackle the underlying culture by increasing transparency on payment practices and performance.
‘The measures we are consulting on will make it clear to small businesses and consumers alike which large businesses behave properly, and those that think they can ride roughshod over their suppliers.’
The consultation paper proposes that companies report on the following metrics: the proportion of invoices paid beyond terms; the proportion of invoices paid within 30 days; the proportion of invoices paid over 30, 60 and 120 days; and the average time taken to pay invoices. It will close on 13 January 2015.
The Institute of Credit Management has welcomed the proposals, with Chief Executive Philip King saying: ‘I applaud the measures in the Small Business Bill to drive change by allowing more visibility of how businesses behave in paying their suppliers. Small businesses need to make better informed decisions before entering into commercial relationships and this measure will be invaluable in helping them enter into such relationships with their eyes wide open.’