In big news for small business owners, the Government is set to roll out a comprehensive set of measures aimed at tackling the perennial issue of late payments. The upcoming Prompt Payment & Cash Flow Review comprises game-changing policies designed to enhance enforcement and delivery, ensuring more small businesses get paid on time.
The Government has announced a new set of measures to help small businesses tackle the issue of late payments. The measures will be included in the upcoming Prompt Payment & Cash Flow Review and are designed to improve delivery and enforcement of policies, enabling more small businesses to get paid on time. Late payment of invoices and long payment terms are key issues that businesses, especially SMEs, highlight as a barrier to their growth. Owners and managers are forced to spend disproportionate time chasing payments; the resulting cash flow problems cause even good, viable firms to struggle. In 2022, Small and Medium-sized Enterprises (SMEs) were owed on average an estimated £22,000 in late payments.
In a statement, the Government says its measures to be announced in the review will include:
- Extending the Reporting on Payment Practices and Performance Regulations 2017. Following consultation, the Government will take forward legislation to extend payment performance reporting obligations. They will include new metrics for reporting, including a value metric, so businesses and commentators can see the value of invoices, including invoices paid late, and a disputed invoices metric. They will also introduce reporting on retention payments for businesses in the construction sector.
- Providing greater advice to small businesses on negotiating payment terms that better suit them, and on how going digital can help them get paid quicker and manage their cash flow.
- Broadening the powers of the Small Business Commissioner: Introducing broader responsibilities, enabling the Commissioner to undertake investigations and publish reports where necessary on the basis of anonymous information and intelligence. This will require primary legislation, so will be subject to the legislative timetable.
- Small Business Minister Kevin Hollinrake said: “Small businesses form a crucial part of large companies’ supply chains. Without them, they couldn’t do business. It’s only right that they should be paid promptly for their services.”
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