Written by: Keith Tully
Reviewed: Tuesday 12th March, 2019
The chancellor of the exchequer Philip Hammond has said that action needs to be taken to tackle the “scourge of late payments” within business supply chains.
Across the country, late payments of supplier invoices cost companies of all sizes billions of pounds collectively and lead to thousands of insolvency cases each year.
Small businesses are particularly hard hit by the problem of having their larger scale customers prove to be stubbornly sluggish or reluctant payers.
According to the Federation of Small Businesses (FSB), four out of five small businesses have had issues with late payments and the organisation has been calling on the government to take a lead in tackling the problem.
The chancellor took the opportunity in his Spring Statement at the House of Commons in Westminster to address the subject and say “we need to tackle the scourge of late payments”.
“As a first step we will require company audit committees to review payment practices and report on them in company accounts,” he said.
Mr Hammond also announced that the government will launch a consultation looking at the possibility of bringing in legislation that makes further demands of listed companies when it comes to the issue of late payments.
The FSB has said it is particularly pleased to see that the government will oblige all large businesses to give a non-executive director responsibility for supply chains and late payment issues.
“The end of late payments could finally be in sight,” said Mike Cherry, the FSB’s national chairman, in response to the chancellor’s announcements.
“It can’t come soon enough, to bolster small businesses at a time when they are in great need of support and a lift in confidence.”
Mr Cherry has previously said that companies across the country are “sick and tired of being left out of pocket by some unscrupulous big businesses”, who he says take advantage of the imbalances of power within supply chains to “improve their own balance sheets or mask their own financial failings”.
“Nobody should want to see small business owners turning to personal credit cards or overdrafts because of late payments, or even worse for a business to go under as a result of not getting paid,” he said, prior to the chancellor’s Spring Statement.
22nd July 2019
Pub businesses have been closing at a rate of 40 per month over the course of this year, according to the latest figures on the subject.Read More
18th July 2019
The UK economy is likely to be plunged into recession in the aftermath of a No Deal Brexit, according to the Office for Budget Responsibility (OBR).Read More