Business Secretary Grant Shapps has announced The Payment and Cash Flow review to tackle late payments for small businesses.
The review will scrutinise existing payment practices to make sure small firms aren’t ripped off by larger businesses, with £23.4bn in invoices currently outstanding for smaller firms.
More broadly, the review will look at:
- 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 cash flow
- Barriers to accessing finance
A consultation on the payment reporting regulations, setting out specific proposals on renewal and improvement of these duties, will also be examined.
Shapps said: “The UK’s 5.5m 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. I also want to remind big businesses of their duty to ensure their smaller suppliers are paid promptly.”
The Procurement Bill is also being debated in parliament. This will mean that 30-day payment terms apply in public sector which aims to encourage more small business with small budgets to bid for public sector contracts.
A review of the Small Business Commissioner in both its role and effectiveness will also draw on the consultation into the powers of the Small Business Commissioner carried out in 2020.
“I know the joy and freedoms of owning and running your own business, but also know what it’s like to lay awake at night and worry about paying the bills,” said Minister for Small Business, Kevin Hollinrake.
“We’re really keen to launch this review. We’re looking at the progress we’ve made so far, what we’ve learned, but also what else we can do, particularly in the context of reporting, the Prompt Payment Code (PPC) and the Small Business Commissioner.”
Small Business Saturday
The announcement coincides with this year’s Small Business Saturday (December 3), an annual campaign encouraging consumers to shop local.
Find out how to get involved in Small Business Saturday.
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