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New measures to prevent late payments
The Government has announced a set of new measures to stop late payment to small businesses, following pressure from business groups.
Under the proposed rules, audit committees will be required to report payment practices in their company annual reports.
Subject to consultation, new powers could be given to the small business commissioner to prosecute and impose fines on larger businesses that pay late.
The proposals also include creating a fund to encourage small businesses to use technology to simplify invoicing, payment and credit management.
According to the Federation of Small Businesses (FSB), late payments lead to the closure of around 50,000 small businesses a year.
Mike Cherry, national chairman of the FSB, said:
"Ending late payments and poor practices is not only the right and fair thing to do, it will also spare small firms the financial impact of waiting for the money they're owed, and instead allow them to invest and grow."
Edwin Morgan, interim director-general of the Institute of Directors, added:
"These proposals mark a significant step forward in the fight against late payments.
"Forcing larger firms to report on their payment practices will ensure much greater scrutiny where standards fall short, and sunlight is often the best disinfectant."
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