3-minute read
The government wants to order companies to pay up if you make a complaint about late invoices, with fines for firms that don’t comply.
The proposals are part of a consultation launched by the Small Business Minister, Paul Scully, designed to help small businesses with their cash flow amidst the coronavirus outbreak.
Pay.UK estimates that small businesses are owed £23.4 billion in overdue invoices. The government says that this is threatening the survival of small businesses.
So the new consultation includes six key proposals designed to give new powers to the Small Business Commissioner, with the aim of resolving (and preventing) overdue invoices.
Here are the proposals:
The consultation is open until 24 December and you can give your views here.
Last year, the Federation of Small Businesses (FSB) estimated that 50,000 small businesses go under each year because of late paying customers and clients.
The Small Business Commissioner’s office was set up in December 2017 under the remit of tackling poor and unfair payment practices.
The office aims to resolve complaints made by smaller businesses (with fewer than 50 employees) against large business customers (with more than 50 employees).
But the office has had limited success. While the government claims the Small Business Commissioner has retrieved £7.5 million owed to small businesses, this is still a small portion of the estimated £23.4 billion currently owed in late payments.
And the first Small Business Commissioner, Paul Uppal, was forced to resign in 2019 after less than two years in the role, following an alleged conflict of interest.
In December 2019, Uppal told The Times that he was “shocked” and “bruised” by the episode, saying: “I think we exceeded expectations for our limited budget and ten staff”.
The interim Small Business Commissioner is Philip King, who has previously been a board member of the Start Up Loans Company.
Late invoice payments cost small businesses time and money – research from digital bank Tide reveals that the average small business spends up to one and a half hours a day chasing payments.
If you’re owed money, you can use our free late payment letter and outstanding invoice template to nudge your customers and clients.
But there are also steps you can take to prevent late payments, including:
Do you think the proposed powers will stop overdue invoice payments – and will you send a response to the consultation? Let us know in the comments below.
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