Guide to help businesses avoid late payments published
Guidance to help large businesses improve their payment practices and pay their suppliers on time has been published.
The guide comes after research from payment processor BACS found that almost half of small and medium-sized businesses have problems with late payments, with over £26 billion being owed to them.
The guidance has been published before the Duty to Report regulations which will come into force in April 2017. This will see large businesses and limited liability partnerships (LLPs) being required to report their payment practices twice a year, such as the average time it takes them to pay their suppliers.
Federation of Small Businesses (FSB) National Chairman Mike Cherry described the Duty to Report regulations as “the centrepiece of the Government’s transparency agenda to combat poor payment practice.”
The FSB estimates that if payments were promptly made, the death of 50,000 businesses could be avoided each year. This could help to boost the UK economy by £2.5 billion.
Small Business Minister Margot James said: “The UK is home to a record 5.5 million small businesses and the industrial strategy will help address many of the challenges they face getting finance and scaling up.”
She said that it is totally unacceptable that small and medium-sized businesses are owed £26.3 billion in late payments as this hinders their ability for growth and does not have a place in an economy that works for everyone.
Commenting on the new guide, she added that large businesses play an important role, and the new guidance will help them to fulfil their responsibilities and improve payment practices.