The government has launched a consultation aimed at giving more powers to the Small Business Commissioner (SCB) to help small firms with late payment issues.
The Department for Business, Energy and Industrial Strategy has proposed new powers which include ordering businesses to pay in good time and issuing fines if they do not, ordering companies to share information on payment practices and the power to launch investigations.
Currently, £23.4bn worth of late invoices are owed to small firms across Britain, according to the department.
The new powers proposed also include:
Small business minister, Paul Scully, said: “Late payments are a terrible burden for small businesses, not only disrupting their cash flow but posing a threat to their survival in many cases. We are committed to tackling this problem, supporting small businesses at this critical time for the British economy by helping them to secure payment on time.”
Mark Supperstone, managing partner a ReSolve, a business advisory restructuring firm, said: “Many of the government’s support initiatives have been founded on injecting extra capital into the system or deferring tax payments. These have been vital to keeping the economy afloat during the global pandemic but it is costly and therefore not sustainable.
“Enforcing timely payments, on the other hand, should only incur negligible costs and therefore can be implemented for the long-term. Most importantly though, it enforces good business practices.”