The government is to review worsening UK Small Business late payments it has been announced.
Business secretary Grant Shapps said the review was to stop larger companies “ripping off” their smaller counterparts. The government also urged larger businesses to pay their suppliers promptly.
It warned that small businesses spend significant time and resources chasing late payments from businesses they supply, which can lead to cash flow problems.
The Payment and Cash Flow review will scrutinise existing payment practices and the measures in place to make sure Uk Small Businesses are not ripped off by their larger clients.
The review will consider the progress made in specific sectors of the economy in combating late payment and will also include an in-depth examination of current payment reporting regulations and the Prompt Payment Code.
Accounting software solutions
Also within the scope of the review is 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, and identifying barriers to accessing finance, are also part of the review’s remit. The review will include a consultation on the payment reporting regulations, setting out specific proposals on renewal and improvement of these duties.
The review of the Small Business Commissioner will consider both its role and effectiveness, drawing on the consultation on the Commissioner’s powers that was conducted in 2020.
Meanwhile, the Procurement Bill, which is currently being debated in Parliament, sets out the requirement for 30-day payment terms to apply in public sector supply chains.
Small Business Debt Collection action urgent
There have been previous calls for Small Businesses to act in the face of late payments. Uk Debt Collection News has issued the call for more action to be taken. Small Businesses are often hesitant of taking Debt Collection action to recover unpaid invoices.
It has been reported that thousands of SME’s have gone bust due to not taking debt collection action.