Late payments are a real pain point for small and medium enterprises across the UK – so much so, in fact, that research shows SMEs were owed an average of Ł22,000 in outstanding late payments.
Persistent late payments mean that businesses are unable to invest or spend with much certainty, affecting the economy at large and stalling growth. There’s also a big administrative burden as constantly chasing unpaid invoices and late payments diverts resources and puts pressure on staff. So, what do the new plans reveal?
Extension of Reporting on Payment Practices
The government plans to extend the Reporting on Payment Practices and Performance Regulations 2017. New metrics, such as a value metric for late payments and a disputed invoices metric, will be introduced.
Reporting on retention payments will also become mandated for businesses in the construction sector, which was one of the most badly affected sectors in 2022.
Guidance on negotiating payment terms
Small businesses will receive more advice on negotiating payment terms that align with their needs. Moreover, digital tools for quicker payments and improved cash flow management will be a real focus, with small businesses encouraged to adopt these instead of old-fashioned and manual cash management methods.
For those in need of support and guidance, Tewkesbury business advisory services from agencies such as www.randall-payne.co.uk/services/accountancy/tewkesbury-accountants/ can assist.
Empowering the Small Business Commissioner
The Small Business Commissioner’s role will be expanded to enable investigations and reports based on anonymous information and intelligence. This enhancement will require primary legislation and will be subject to the legislative timetable.
Kemi Badenoch, Secretary of State for Business and Trade said: “I know that late payments are a massive barrier to growth and I am determined to fix that. The measures we’re announcing will take a big step towards making sure SMEs get their payments on time, helping firms to grow and prosper.”
A more robust payment culture will generate a more predictable cash flow for businesses. This is a real step in the right direction and heralds a gradual end to persistent late payments.