Following the announcement of a new campaign against unfair payment practices, Chancellor Philip Hammond has said that late payments add an “unacceptable” financial and operational burden on small business owners.
Recent research indicated that late payments attribute to the collapse of up to 50,000 small businesses each year and more than one in 10 firms struggle to pay their staff because of the direct impact of late payments.
The Government is now calling on big businesses to “play by the rules” or risk fines.
Under the campaign, policymakers will work with business bodies the Federation of Small Businesses (FSB) and the Confederation of British Industry (CBI) to launch several new measures to tackle the late payment culture.
This includes proposals to fine those failing to comply with the rules and giving the Small Business Commissioner – launched last year to help small firms get paid on time – extra enforcement powers.
The Government will also work with innovative payment platforms, such as Xero, to develop new technologies to speed up payments between businesses.
Commenting on today’s announcement, Mr Hammond said: “Today marks an important step forward in our work to tackle late payments. This unacceptable behaviour adds a financial and operational burden to small business owners, which is unfair and hampers growth.”
FSB National Chairman, Mike Cherry, said: “Poor payment practices hurt the UK’s small business community and hold back the economy. Large companies should treat their small suppliers fairly and pay them on time.
“Today marks the moment where politicians and business have come together to say – the UK is no longer a place where it is acceptable to pay small business late.”