Consulting on late payments made to small business
The Government has responded to recent YouGov research showing 85% of small firms had experienced late payment over the last two years, despite an existing government-backed scheme.
The consultation comes after many criticised the effectiveness of the Prompt Payment Code, which was established in December 2008 in order to help small suppliers get paid on time.
About 1,500 firms have signed up to it, but the Federation of Small Business (FSB) says some signatories have still managed to stretch settlement periods to as long as 120 days.
This is far longer than the limit set by an EU directive, which says business-to-business payments should be made within 60 days and public sector bills should be paid within 30 days.
A full consultation is planned for later this year and will ask for views on a number of areas including:
- How it can encourage greater responsibility for payment policies at senior management and board level
- How it can make clear which firms are good payers and which aren’t
- How it can strengthen its existing government-backed Prompt Payment Code
- Whether it can do more to enforce existing legislation
- How it can encourage more companies to make use of their existing statutory right to interest for late payments
- Whether there is a case for further legislation or penalties for firms which pay late
- Whether government can do more to help SMEs to help themselves, including through new technologies and services such as electronic invoicing and mobile payments