Tougher measures to tackle the perennial problem of late payments to customers have been announced by the Government.
The new measures, aimed at addressing the delays which frequently hamper business growth, will be included in the forthcoming Prompt Payment and Cash Flow Review.
Following consultation, the regulators propose to increase payment recording obligations whereby businesses must publish their payment practices on a Government web portal.
The procedure holds them accountable for their actions and the information can be used to inform decisions about their reliability.
New metrics for reporting are set to be introduced, including a value metric, so businesses and commentators can see the value of invoices, including invoices paid late, and a disputed invoices metric.
Further measures to be announced in the review include providing greater advice to small businesses on negotiating payment terms that better suit them, and on how going digital can help them obtain quicker payment.
It is also proposed to enable the Small Business Commissioner to undertake investigations and publish reports where necessary on the basis of anonymous information and intelligence.
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, many of whom do not have the resources to absorb long or late payments from customers, and it could boost the economy by £2.5 billion annually.
It’s fantastic that this is being looked at and long overdue. France and Germany have had a regulation like this for a long time. Hopefully this will sort out large companies as they tend to pay SME’s whenever they feel like it.