The government has ordered a review to tackle late payments and urged large companies to pay their smaller suppliers promptly.
Details of the Payment and Cash Flow review were announced by Business Secretary Grant Shapps, who said the government was firmly on the side of small businesses and described the fact that small firms were routinely paid late as “intolerable.” The new review will scrutinise existing payment practices and measures in place to make sure “small firms are not being ripped off by their larger clients.”
In addition, it will include an in-depth examination of current payment reporting regulations and the Prompt Payment Code. The role of the Small Business Commissioner, whose remit is to address the issue of late payments, will also be considered in order to ensure the right arrangements are in place to best support small businesses.
Commenting on the announcement, FSB Policy Chair Tina McKenzie said, “These consultations could be a moment towards reform, but small businesses can’t afford any more delays. To prove this isn’t an exercise in kicking the can down the road, the government must now prove its commitment by giving audit committees of larger companies responsibility to report on payment practices in the publication of the draft audit bill.”