Large firms should each have one person to deal with late payments – FSB

The worsening problem of late payments is a central talking point at the Conservative Party's virtual conference

The Federation of Small Businesses (FSB) has called on the government to introduce fundamental changes to tackle late payments.

Alok Sharma, secretary of state for Business, Energy and Industrial Strategy (BEIS) and Martin McTague, policy and advocacy chairman at the Federation of Small Business, spoke at the Conservative’s virtual party conference yesterday (October 5th).

The late payment issue has worsened since the pandemic. In its report Late Again: how the coronavirus pandemic is impacting payment terms for small firms, 62 per cent of small businesses have experienced an increase an increase and/or had payments frozen completely as a result of COVID-19. McTague said that we need a complete change in attitudes.

“It’s a culture in the UK. There should be one person responsible for supply chain behaviour in a big business. There’s no place to hide, they know the data. They would be responsible for false information.”

He adds that the Small Business Commissioner (SBC) is doing a good job, but he’s got ‘one arm tied behind his back’. The Commissioner is relying on a whistleblower which damages the whistleblower’s relationship with the business and the SBC should have the power to hurt them financially.

“A lot of people decided they have the power to pay when they want to pay. For others, the system is so awful that they don’t know whether they’ve paid someone. It’s endemic – it’s everywhere – and it needs to stop.”

Sharma talked about the possible extension of powers for the Small Business Commissioner. This includes the possibility to compel companies to share information, impose financial penalties and investigate a firm without the need for a third-party complaint. He encouraged business owners to take part in the consultation.

When asked about those that have been working from home, he said it would be interesting to see whether this way will work post-COVID and that it’d be an ‘issue if this is long-term full-time solution’, saying that he would love us to get back to interacting face-to-face.

McTague added that it’s challenging for new people joining business to get mentoring or find networks. He said that looking for new clients is still going to be done in a client facing way rather than through Zoom. Now we’ve learned that we can do things electronically and more efficiently than before.

He urged Sharma not to cripple small businesses with debt, favouring a more innovative approach. “Don’t stifle innovation with debt. Look at different ways you can raise taxes – don’t bash the self-employed.”

“As Conservatives, we believe in keeping taxes as low as possible,” responded Sharma.

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