The UK government has announced significant measures to address late payment issues affecting small businesses.
- New legislation will require companies to provide detailed reports on payment practices in their annual reports.
- Amendments to existing regulations will ensure contractors report on retention practices, aiming to provide transparency.
- A new Fair Payment Code to be launched, ranking businesses based on payment performance.
- A consultation on potential new laws to hold larger firms accountable for late payments will be conducted.
In a bid to support small businesses and stimulate economic growth, the UK government has announced a comprehensive crackdown on late payment practices. These measures are designed to ensure that small firms receive timely payments, reducing the financial hurdles they face.
The government will introduce new legislation that mandates businesses to include detailed accounts of their payment policies and performances in their annual reports. This move aims to bring transparency and accountability to corporate payment practices.
Moreover, amendments will be made to the Reporting on Payment Practices and Performances Regulations. These changes will compel contractors to report key metrics related to retention payments. Such transparency is expected to benefit small suppliers by making large companies more accountable.
In the upcoming autumn, the launch of a new Fair Payment Code, overseen by the small business commissioner, Liz Barclay, will take place. This voluntary code categorises businesses into gold, silver, or bronze tiers based on their payment conduct. Companies that consistently meet the 30-day payment standard are poised to achieve the highest tier, fostering fair treatment of suppliers.
A forthcoming consultation will explore the feasibility of enforcing stricter laws against large firms that delay payments. While precise details of these laws remain undisclosed, the objective is clear: to uphold justice in business transactions and stimulate economic vitality.
Notably, the discussion on possibly banning retentions in construction remains open. Mark Reynolds, co-chair of the Construction Leadership Council, underscores the need for this change to support small contractors.
Prime Minister Keir Starmer emphasises the importance of these initiatives, stating that eradicating late payments is vital for small businesses’ growth and stability. Starmer’s support reflects the long-standing advocacy for such reforms from the small business community.
The government’s initiative represents a landmark effort to ensure timely payments, thereby fortifying the backbone of the UK economy.
