The UK government has unveiled tougher measures in an attempt to address late payment to small businesses ahead of the publication of its Prompt Payment & Cash Flow Review.
In 2022, Small and Medium-sized Enterprises (SMEs) were owed on average an estimated £22,000 in late payments. Improving payment culture in the UK will support smaller businesses and could boost the economy by £2.5 billion annually.
The new measures in the review will include:
· Extending the Reporting on Payment Practices and Performance Regulations 2017. Following consultation, the government will take forward legislation to extend payment performance reporting obligations. This will include new metrics for reporting, including a value metric – so businesses and commentators can see the value of invoices – and includes invoices paid late and a disputed invoices metric;
· Providing greater advice to small businesses on negotiating payment terms that better suit them, and on how going digital can help them get paid quicker and manage their cash flow; and
· Broadening the powers of the small business commissioner by introducing broader responsibilities, enabling the commissioner to undertake investigations and publish reports where necessary on the basis of anonymous information and intelligence.
Secretary of State for Business and Trade Kemi Badenoch said: “SMEs make up 99% of firms in the UK and are the lifeblood of our economy. I know that late payments are a massive barrier to growth and I am determined to fix that.
“The measures we’re announcing will take a big step towards making sure SMEs get their payments on time, helping firms to grow and prosper.”
Research published by Intuit QuickBooks earlier this year found that one in six invoices (17%) issued by SMEs were overdue. Some 52% of SMEs believe that the issues have worsened recently and that their businesses have also been adversely affected by late payments.
“The measures we’re announcing will take a big step towards making sure SMEs get their payments on time, helping firms to grow and prosper.”
Kemi Badenoch, Secretary of Business & Trade
