Business Secretary has today (3 December 2022) –
on Small Business Saturday - announced a comprehensive review
into tackling late payments for small businesses, while urging
large companies to pay their smaller suppliers promptly.
Small businesses routinely spend significant time and resources
chasing late payments from businesses they supply which can lead
to cash flow problems, putting their firms at risk and preventing
them from growing. The majority of small businesses do not have
large balance sheets and cannot accommodate long payment terms or
delays to receiving payment within their cash flow cycle.
The Payment and Cash Flow review will scrutinise existing payment
practices and the measures in place to make sure small firms are
not ripped off by their larger clients – with over £23.4 billion
currently owed in outstanding invoices to UK businesses.
The review will consider the progress made in specific sectors of
the economy in combatting late payment and will also include an
in-depth examination of current payment reporting regulations and
the Prompt Payment Code.
In addition, the statutory review of the Small Business
Commissioner will help to ensure that the UK has the right
arrangements in place to best support small businesses.
Business Secretary said:
The UK’s 5.5 million small businesses are an integral part not
just of our economy, but of our communities too, and this
government is firmly on their side.
That many small firms are routinely paid late is intolerable and
presents a real barrier to productivity, the creation of
high-skilled jobs and ultimately economic growth.
This review will allow us to build on the success we have had so
far in curbing late payment, unshackling small businesses from
this exploitative practice and creating a system that is fit for
the future. While we crack on with this work, I also want to
remind big businesses of their duty to ensure their smaller
suppliers are paid promptly.
The government is already demonstrating its own commitment to
prompt payment through the Procurement Bill, which is currently
being debated in Parliament. The legislation sets out the
requirement for 30 day payment terms to apply in public sector
supply chains which will help level the playing field
for SMEs and
encourage more businesses with smaller budgets to bid for public
sector contracts
The announcement comes alongside the government’s support for
Small Business Saturday - which celebrates small business
successes and encourages consumers to support smaller firms in
their area - with the Business Secretary out on a visit to his
local high street in his Welwyn Hatfield constituency.
Also within the scope of the review is the role of
technology-enabled accountancy platforms in tackling late
payments and promoting a better understanding of prompt payment
measures within the small business community.
The role of finance, particularly how major banks and innovative
lenders can help small businesses manage their cashflow and
identifying barriers to accessing finance will also be part of
the review’s remit. The review will include a consultation on the
payment reporting regulations, setting out specific proposals on
renewal and improvement of these duties.
The review of the Small Business Commissioner will consider both
its role and effectiveness, drawing on the consultation on the
Commissioner’s powers that was conducted in 2020.
The government is committed to supporting small businesses across
the United Kingdom through a series of measures including the
recently expanded Start Up Loans scheme which saw an additional
33,000 new loans made available to SMEs.
Small businesses have also benefited from the Energy Bill Relief
Scheme which provides non-domestic customers with a discount on
their gas and electricity bills in light of the rise in global
energy prices.
As part of the Autumn Statement, the Chancellor announced a £13.6
billion package of support for business rate payers, including
the £500 million Supporting Small Business scheme.
Notes to editors
Read the terms of reference for the
review.
The consultation on the payment reporting regulations will be
published shortly. Following on from the statutory review
of the Regulations, which reported in April 2022, this 12-week
consultation, forming part of the review, will set out specific
proposals on renewal and improvement of these duties. The
consultation will consider whether the Regulations should be
extended beyond 6 April 2024 and whether there should be any
other potential amendments to the Regulations.
Details of the statutory review of the Small Business
Commissioner will be published shortly.
