How is the government tackling late payments?
SMEs are owed more than £44.5 billion in late payments. So, what is the government doing about it?
With more than half of small businesses waiting on payments and 20% citing a slowdown in profit growth, late payment culture is having a significant impact on the UK economy.
Research from FSB has found that 37% of UK SMEs are running into cash flow difficulties and at risk of going out of business. There is increasing frustration about the slow progress made in combating this late payment culture. To tackle the issue for good, the state have appointed a Small Business Commissioner whose main responsibility is to resolve late payment disputes.
Small Business Commissioner to drive late payment culture change
The nation’s first Small Business Commissioner, Paul Uppal, is supporting 5.7 million small businesses in resolving late payment disputes and larger business unfair payment practices.
Uppal was appointed by the government to manage a complaint handling service - launched December 2017. With supply chain bullying culture being rife across UK’s payment culture, this service is crucial in empowering SMEs to retrieve their money.
Upon taking on the role, Mr Uppal said: “My mission is to help all small businesses nurture positive and lasting relationships with their customers that work in the best interests of both.”
One of Mr Uppal’s first initiatives was to launch a new website highlighting the rights of small businesses and outlining the steps to take should they need to take further action when larger businesses they supply owe them money.
The complaint handling service isn’t the only tactic initiated by the government. In April 2017, new regulations have forced businesses to publicly report the average time they take to pay their suppliers. This means SMEs can make informed decisions on who to do business with.
Read our article for more information about how to tackle late payments.
The economic impact of late payments in the UK
- High number of business failures in the UK: The Federation of Small Businesses (FSB) estimate that over 50,000 companies would have stayed in business in 2014, if it wasn’t for late payments. This would have generated a £2.5 billion uplift in GVA to the UK economy.
- Slow-down in small business profit growth: FSB also estimate that if small businesses did not face late payments this year, profit growth in 2016 would have been 2.6% higher. This would translate into a £4.8 billion uplift in small business profits, reflecting higher levels of turnover and reduced costs, such as overdraft or loan charges.