SMEs to benefit from new payment reporting rules

Small businesses are set to benefit from new government measures designed to increase the transparency of payment practices.

From April 2017, large businesses will have to publish details twice a year on the average time taken to pay supplier invoices.

Small business minister Margot James made the announcement earlier this month as part of a package of reforms to tackle late payments.

“Unfair payment practices and unnecessary red tape hamper [small businesses] ability to grow and have no place in an economy that works for all,” Ms James explained.

“By shining a light on how large businesses pay their smaller suppliers, we want to empower small businesses and drive a real change in payment culture.

“I want to thank the individuals and business groups who have responded to the consultation and helped shape this policy.”

As of June 2015, the overall level of late payment owed to SMEs was reported as £26.8bn.

A recent survey from the Federation of Small Businesses (FSB) found that, on average, 30% of payments are received late.

The group estimates that 50,000 business deaths could be avoided every year if payments were made promptly, as well as this adding £2.5bn to the UK economy.

These latest measures are intended to increase transparency and help small businesses make informed decisions about who they do business with.

Mike Cherry, national chairman of the FSB, added: “The comprehensive and regular duty to report is the first step to combat a business culture that feels like one where it is OK to pay small firms late.

“We need to see executive board level engagement and scrutiny of payment practices to deliver lasting cultural change.”

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