Late payment in focus as election draws near
Tuesday, 28 Apr 2015
With the general election just around the corner, the various political parties have been busy outlining their plans for the economy. Small business has come in for particular attention, with all sides nailing their colors to the mast and making an array of promises.
Head of UK E-invoicing Centre of Excellence
Shortly before parliament was dissolved in March, SMBs received a timely boost when the Small Business, Employment & Enterprise (SBEE) Act finally received royal assent and was signed into law.
Several years in the making, the SBEE Act attempts to help end the late payment epidemic that is crippling small businesses across the UK. The payments body BACS estimates outstanding payments in the UK total almost £40 billion, with the majority owed to SMBs. The SBEE Act requires large companies to review their payment procedures twice a year and report their findings back to the government. Major corporate buyers will have to publish the payment terms, payment timelines, and other details regarding their invoice settlement practices, providing better visibility for SMBs before they enter into contracts.
The coalition parties are hailing it as a victory, and using it as an example of how they are fighting for small business owners. “We are determined to make Britain a place where late payment is unacceptable and 30-day terms are the norm – with a clear 60-day maximum,” said the Conservative Party’s Matthew Hancock, Minister of State for Business and Enterprise. “We’ve acted to ensure all public payments do that, right down to the supply chain, and are bringing in new strict transparency rules.”
The junior party in the coalition has also been keen to demonstrate that SMBs and the late payment issue are high on its agenda. Speaking at the Federation of Small Business (FSB) Conference, Liberal Democrat Leader and Deputy Prime Minister Nick Clegg reiterated his party’s position on late payment. “We’re also doing what we can to tackle the number one business issue right now for the FSB and its members - late payment,” he said. “When you’re working hard, doing what you can to keep your business going, it’s just not right that one late payment can be all it takes to wreck your business and pull you under.”
“We recently announced changes to strengthen the Prompt Payment Code, which will now promote 30-day payments across organisations as standard and maximum terms of 60 days. And, building on this, we’re considering how to give business bodies like the Forum of Private Business further powers to prevent bigger companies pushing small companies around by delaying payment, using unfair payment practices - to ensure these measures are fully effective.”
Opposition parties have been setting out their stalls for small business as well. Labour’s manifesto promises to help SMEs gain access to finance via a British Investment Bank, which will “have the resources to improve access to finance for small and medium-sized businesses, and will support a network of regional banks” as well as “tackle the national scandal of late payment.” Labour also said it would put small business at the "heart of government" through the creation of a Small Business Administration, which would be responsible for “ensuring contracts are accessible and regulations are designed with small firms in mind.”
With all three major parties declaring war on late payment, SMBs can be hopeful that no matter who ends up in power, the current situation will improve. What remains to be seen is how effective the measures contained within the SBEE Act will be, and what additional steps will be taken by whoever is running the country post-election. Roll on May 7.