16 Oct 2013
The Government is to launch a new consultation aimed at tackling the problem of late payment for small businesses, Prime Minister David Cameron has announced.
As part of the consultation, the Government will examine the effectiveness of the existing Prompt Payment Code and consider whether there is more that can be done to hold companies to account against it.
The code was set up in 2008 with the aim of encouraging large businesses to pay their suppliers on time.
However, many of Britain’s biggest companies have still not signed up to the voluntary code, while some signatories are still thought to be stretching payment terms to up to 120 days.
The consultation will seek views on a number of issues, including ways to:
- improve oversight and responsibility for payment policies at senior management level
- increase transparency around which firms are good payers are which aren’t
- encourage companies to exercise their existing statutory right to interest for late payments.
The Government will also consider whether more can be done to enforce existing legislation and whether there is a case for further legislation or penalties.
Katja Hall, chief policy director of the CBI, welcomed the consultation. ‘Late payment is a serious issue for all businesses but particularly for smaller firms, as cash flow is their life blood.
‘As the voice of small, medium and large businesses, the CBI welcomes this consultation and looks forward to working closely with government to improve payment terms in the UK.’
A recent YouGov poll found that 85% of the small businesses questioned had experienced late payment over the last two years.