The Government's new bill aims to address late payments in an attempt to support small businesses. As many as 38 businesses shut down each day owing to late payments, which cost the economy £11billion a year.
The Government will today introduce a new bill into Parliament to crack down on the scourge of late payments in an attempt to help struggling small businesses .
SMEs have been quietly battling late payments and are forced to chase missing cash from businesses they supply, with the issue only worsening since the cost-of-living crisis. As many as 38 businesses shut down each day, partly owing to late payments, according to the Government, costing the economy £11billion a year. Business secretary Peter Kyle told the Mail that the issue of late payments 'is something that simply hasn't had the light shone on it.
' He added: 'A healthy economy has businesses that sometimes fail for lots of different reasons… but an unhealthy economy is one in which businesses are exploited or strangled to death, and that's what we're seeing with late payments. ' The Commercial Payments Bill will enforce a 60-day cap on payment terms on all large firms, with the mandatory interest on late payments set at eight per cent above the England base rate.
Business secretary Peter Kyle will grant new powers to 'act swiftly' on repeat offenders Kyle said: 'You've invested the labour in, you've invested the R&D in, the materials that you've had to buy to make it, I think it is entirely reasonable that an outer limit of two months is expected.
' As part of the bill, the Small Business Commissioner will also be handed new powers to investigate poor payment practices and enforce fines that could be worth tens of millions. He has said that the Commissioner has his 'full backing to act as swiftly as possible… so that these things don't drag on forever.
' But when asked whether the government would issue targets to measure success, Kyle only reiterated that he wanted to see 'assertive action from the Commissioner'. RELATED ARTICLES Share this article Share 'When I come back to consult on this in the coming years, I want to have seen a tangible step change in the relationship between all larger businesses and their supply chains,' he said. Directors of firms that persistently make late payments will also be targeted.
Kyle told the Mail that the Commissioner could hand fines worth over £10million for repeat offenders.
'Any business that has directors who allow that to happen, it will be a blot on their record. I think it would have a real impact on directors' ability to move up.
' He also provided an assurance that the legislation would not be watered down as it passes through parliament. 'This has come from considerable, exhaustive consultation… there's no way that I'm going to resign from delivering them what they've been asking for. ' Join the discussionShould big companies face harsher penalties for delaying payments to small businesses? What's your view?
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Late Payments Small Businesses Cost Of Living Crisis Curbs On Payment Terms Mandatory Interest On Late Payments Grant Of New Powers Target Setting For Success Establishment Of Penalties For Repeat Offender New Powers Conferred To Act Swiftly On Poor Pa
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