Press release: Government takes action to back small businesses and tackle late payments
From: Department for Business and Trade and The Rt Hon Kemi Badenoch MP
Published: 2 October 2023
Promising news for small businesses - In a move to bolster the backbone of the British economy, the UK Government has announced a series of new measures to address the issue of late payments and create a fairer business environment for SMEs.
These firms play a vital role in driving economic growth and job creation. If successful, the latest initiatives could help to boost the economy by £2.5 billion annually.
Final details of the measures will be included in the upcoming Prompt Payment & Cash Flow Review (publishing date to be confirmed).
Here's what we know so far:
Prompt Payment Code (PPC) Reinforcement
One of the key measures introduced by the government is strengthening the Prompt Payment Code. This initiative ensures that larger businesses pay their smaller suppliers on time, fostering a culture of fairness and financial stability within the business ecosystem.
Speedier Dispute Resolution
The government is launching a new arbitration scheme for unresolved payment disputes to ease the burden on small businesses. The scheme aims to save time and precious resources for SMEs, helping them navigate the challenges of late payments more effectively.
Simplified Reporting
The government is also streamlining payment reporting requirements, making it easier for businesses to track and address late payments. This move is expected to create transparency in payment practices, benefiting both small suppliers and large corporations.
Support for the Construction Sector
Recognising the specific challenges the construction sector faces, the government is introducing reporting on retention payments for businesses in this industry.
This targeted support aims to ensure fair and timely payments throughout the supply chain and better management of construction cash flow.
Small business guidance
In addition to the above measures, part of the support will focus on empowering small businesses through payment advice and guidance.
Support in Payment Negotiations
Small businesses often face challenges when negotiating payment terms with larger firms. The government will provide increased advice and resources to help SMEs navigate these negotiations effectively and secure terms that better suit their financial needs and stability.
Harnessing the Power of Digital
The government has outlined digital's critical role in helping small businesses get paid faster and manage their cash flow efficiently. Small businesses will be encouraged and guided in adopting digital payment technologies to streamline payment processes, reduce delays and collect outstanding invoices quickly.
Promoting ESG Integration
For businesses that have ESG (environmental, social, governance) programmes, the government will promote the embedding of prompt payments. This move underscores the significance of ethical business practices and invoices as key components of a company's responsible and sustainable approach.
A step in the right direction
With the potential to foster a fairer and more prosperous small business sector, it’s encouraging to see plans being made to support SMEs on multiple fronts.
As we await further details, we hope the outlined measures go some way toward encouraging responsible business practices and improving financial stability for years to come.
Stay tuned for further updates as these measures take shape.
Read the full press release here: https://www.gov.uk/government/news/government-takes-action-to-back-small-businesses-and-tackle-late-payments