Companies must play by the rules to tackle late payments

The Chancellor of the Exchequer, Philip Hammond, released a statement advising that radical cultural change is needed in order to end the scourge of late payments. The statement goes on to state that in order to fully support the growth of small businesses, companies must ‘play by the rules’ as unfair behaviour results in 50,000 small firms going out of business every year.

• 1 in 10 (15%) small firms struggle to pay staff and other expenditures on time due to late payments
• Research shows 1 in 4 (26%) small business owners are struggling with personal health issues due to late payments
• Chancellor brands late payment as “unacceptable behaviour”
• The UK is no longer a place where it is acceptable to pay small businesses late
• Government proposes to fine those failing to comply with the rules
• Small Business Commission’s enforcement powers to be enhanced
• Innovative technology payment platforms to speed up payments between businesses
• Company boards to be held accountable for payment practices

Aspire Comment

Government responded to its ‘Creating a Responsible Payment Culture’ call for evidence in June 2019 setting out its intended strategy for tackling late payment which included the increased powers for the Small Business Commissioner.

Using the Aspire strap line “Play by the Rules” it is clear that, in the wake of high profile collapses such as Carillion which put a spotlight on the company’s shocking payment practices, Government is committed to tackling the late payment culture which is rife and causes thousands of small businesses to become insolvent every year.

However, this only goes to highlight that the provisions of clause 3 (Companies Duty to Publish Report on Payment Practices) of the Small Business, Enterprise and Employment Act 2015 have been ineffective.This legislation, which required large companies to report their payment practices was introduced in April 2017 but appears to have had little effect.