Action at last on late payments

The government has unveiled its Small Business Plan to support small and medium sized firms (SMEs) across the country.

Its measures include tackling the scourge of late payments with what it describes as “the most significant legislative reforms in 25 years”.

Late payments are costing the UK economy £11billion a year and lead to the shutting down of 38 businesses every day.

The new laws are set to give stronger powers to the Small Business Commissioner to empower them to wield fines, worth potentially millions of pounds, against the biggest firms who persistently choose to pay their suppliers late.

The commissioner will be given powers to carry out spot checks and enforce a 30-day invoice verification period to speed up resolutions to disputes.

The upcoming legislation will also introduce maximum payment terms of 60 days, reducing to 45 days, giving firms certainty they’ll be paid on time.

Audit committees, under the proposals, will also be legally required to scrutinise payment practices at board level, placing greater pressure on large firms to show they’re treating small suppliers fairly backed by mandatory interest charges for those who pay late.

Prime Minister Keir Starmer said: “From builders and electricians to freelance designers and manufacturers – too many hardworking people are being forced to spend precious hours chasing payments instead of doing what they do best – growing their businesses.

“It’s unfair, it’s exhausting, and it’s holding Britain back. So, our message is clear: it’s time to pay up.

“Through our Small Business Plan, we’re not only tackling the scourge of late payments once and for all, but we’re giving small business owners the backing and stability they need for their business to thrive, driving growth across the country through our Plan for Change.”

As part of the plan, the government is also tackling another major barrier for small businesses – access to finance.

It is launching a new £4bn wave of financial support aimed at boosting growth and supporting more small businesses to start up and grow.

This includes a £1bn boost for new businesses, with 69,000 Start-Up Loans and mentoring support to inspire the next generation of entrepreneurs and small business owners.

Accelerating SME growth by just one percentage point per year, could deliver £320bn to the UK economy by 2030.

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