Small Business Minister Kelly Tolhurst has unveiled new measures to ensure small businesses get paid on time by holding larger company boards accountable for poor payment practices made to other businesses.
The Government will consult on strengthening the powers of the Small Business Commissioner so that they can hold larger businesses who fail to make payments on time accountable.
New powers could include imposing financial penalties or binding payment plans on large businesses found to have unfair payment practices.
Responsibility of the voluntary code of best practice – the Prompt Payment Code – will be moved to the Small Business Commissioner, which will ensure they have the powers to implement a culture change in unfair payment practices.
Other proposals include a tough new approach for large firms that do not comply with the mandatory Payment Practices Reporting Duty, which requires large businesses to report payment practices to a national database twice a year.
There will also be a Business Basics Fund competition with prizes of up to £1 million in funding to encourage businesses to use technology that will simplify invoicing, payment and credit management, and ensure they work as effectively as possible.
Commenting on the announcement, a spokesman for the Federation of Small Businesses (FSB) said that the measures could finally see an end to poor payment practice. He added that changing the UK’s business culture could boost the small business community, productivity and growth.
According to the Government, the measures will level the playing field for the UK’s 5.7 million small businesses, and deliver on the modern Industrial Strategy’s ambition to make the UK the best place to start and grow a business.
Jon Stocker, General Practice Partner at Milsted Langdon, said: “It is crucial that UK start-ups do not get penalised for other companies failing to pay on time, otherwise this could have a detrimental impact on their success, as well as the UK’s economic growth.
“If you have a start-up business, and would like further support on how to ensure you are paid on time, so you can avoid financial penalties then please get in touch today.”
For more information about how Milsted Langdon can help, please contact Jon at firstname.lastname@example.org or by calling 01935 383500.