Government moves to tackle late payments with commissioner search
The Government is actively taking steps to tackle late payment issues in the UK by seeking to appoint a small business commissioner.
Although the role has been talked about for many months, action is now being taken with more than £26.3 billion owed to small firms in unpaid invoices.
The new small business commissioner will be responsible for dealing with, and effectively managing, payment disputes between SMEs and larger firms.
This role forms an essential part of overcoming the cash flow issues that many smaller businesses are reportedly facing as a result of a lack of payment from suppliers for goods and services.
The Department for Business, Energy and Industrial Strategy are leading the search for the new role, which comes after widespread pressure from bodies to tackle the causes of late payments.
Small firms claim that their growth potential is limited by the cash flow problems that result from unpaid invoices, while some are forced into insolvency as a result as they are unable to overcome their debts.
Secretary of State Greg Clark will make the final decision on the appointment with support from business representatives such as Federation of Small Businesses chairman Mike Cherry.
Mr Cherry has warned that the commissioner will “need the authority to tackle the most underhand supply chain bullying tactics” in order to overcome the issue.
He pointed to firms querying invoices at the last minute and delaying payments to manage their own cash flows as key reasons why smaller firms were being made to suffer.
Payment processor Bacs has indicated that around half of the UK’s small and medium sized businesses – which number around 5.5 million firms – have faced late payment issues.
That figure is more than two million higher than at the turn of the century – a similar figure to the number of companies reportedly requiring payments.
New regulations that come into effect from April mean that businesses will need to publically report the time it takes them to pay suppliers.
The move should make the payments process more transparent, while companies fearing a reversal in fortunes should consider an independent business review – such an approach should highlight any potential risks and ultimately support improvements in wider business practices.
By Phil Smith