Boost to small businesses as payment reporting rules unveiled for large firms
The government has set out measures to increase transparency of payment practices to support small firms.
- government sets out measures to increase transparency of payment practices to support small firms ahead of Small Business Saturday
- from April 2017 large businesses will have to publish details twice a year on the average time taken to pay supplier invoices
- the is part of a package of measures to tackle late payment, which will also include the appointment of the Small Business Commissioner
Large companies will be required to publish details on how quickly they pay their suppliers, under draft regulations released today (2 December 2016) by Small Business Minister Margot James.
Coming into force from April 2017, this ‘duty to report’ will require large companies and limited liability partnerships (LLPs) to publicly report twice yearly on their payment practices and performance, including the average time taken to pay supplier invoices. This will put a spotlight on bad practice and lead to improved standards.
As of June 2015, the overall level of late payment owed to small and medium sized businesses was reported as £26.8 billion. A recent survey from the Federation of Small Businesses said that, on average, 30% of payments are received late. Draft measures announced today aim to tackle this problem by increasing transparency and helping small businesses make informed decisions about who they do business with.
Government will publish guidance on how to comply with the duty to report early next year, to help large businesses prepare for the new reporting requirements.
Small Business Minister Margot James said:
On Small Business Saturday, this government will be celebrating the UK’s record number of small businesses, which are creating jobs and supporting local communities. Unfair payment practices and unnecessary red tape hamper their ability to grow and have no place in an economy that works for all.
By shining a light on how large businesses pay their smaller suppliers, we want to empower small businesses and drive a real change in payment culture. I want to thank the individuals and business groups who have responded to the consultation and helped shape this policy.
Mike Cherry, National Chairman of the Federation of Small Businesses, said:
Tackling late payments is now a key part of the government’s corporate governance agenda. The comprehensive and regular duty to report is the first step to combat a business culture that feels like one where it is OK to pay small firms late. It is not OK - we estimate that 50,000 business deaths could be avoided every year, if only payments were made promptly – adding £2.5 billion to the UK economy. We need to see executive board level engagement and scrutiny of payment practices to deliver lasting cultural change.
The duty to report requirement is part of a package of government measures to tackle the issue of late payment. This includes the appointment of the Small Business Commissioner, who from autumn 2017 will support small businesses in resolving payment disputes.
The government also has a manifesto commitment to find £10 billion worth of deregulatory savings for business from unnecessary regulation that stands in the way of growth. The next steps towards extending the ‘Business Impact Target’ to the activities of more regulators and implementing the Growth Duty have been set out today.
The duty to report requirement is part of a package of government measures to tackle the issue of late payment. This includes the appointment of the Small Business Commissioner, who from Autumn 2017 will support small businesses in resolving payment disputes.
The government also has a manifesto commitment to find £10 billion worth of deregulatory savings for business from unnecessary regulation that stands in the way of growth. The next steps towards extending the ‘Business Impact Target’ to the activities of more regulators and implementing the Growth Duty have been set out today.
Small Business Saturday is a grassroots, non-commercial and not-for-profit initiative that exists to champion small businesses. Now entering its fourth year, it has become firmly established as the UK’s most successful small business campaign.
Notes to editors:
- Further details on the late payment policy have been released in a government response to a consultation on the Duty to Report on Payment Practices and Performance.
- On 29 November 2016 government launched a public consultation on measures to strengthen corporate governance.
- Read the government response to consultation on the Business Impact Target, Growth Duty and Small Business Appeals Champion.