ICSM Business News: Kemi Badenoch moves to tighten up rules on late payment but ICSM's Ian Carrotte feels more can be done as late payers cost SMEs £2.5 billion a year

By Harry Mottram: The Government has added to its regulations over late payment to firms from their clients in an attempt to further shame companies from abusing their suppliers’ credit terms. The new measures will be included in the upcoming Prompt Payment & Cash Flow Review, as part of an ongoing Whitehall strategy to end the culture of late payment. These will include the extending of the Reporting on Payment Practices and Performance Regulations 2017. The press release said that the following consultation, the ‘Government will take forward legislation to extend payment performance reporting obligations’.

Business secretary and MP Kemi Badenoch’s department said the new measures would provide: “Greater advice to small businesses on negotiating payment terms that better suit them, and on how going digital can help them get paid quicker and manage their cash flow.”

Plus, they would: “Broaden the powers of the Small Business Commissioner: Introducing broader responsibilities, enabling the Commissioner to undertake investigations and publish reports where necessary on the basis of anonymous information and intelligence.”

The measures announced ends with this promise: “This will require primary legislation, so will be subject to the legislative timetable.”

Secretary of State for Business and Trade Kemi Badenoch said: “SMEs make up 99 per cent of firms in the UK and are the lifeblood of our economy. I know that late payments are a massive barrier to growth and I am determined to fix that. The measures we’re announcing will take a big step towards making sure SMEs get their payments on time, helping firms to grow and prosper.”

Small Business Minister Kevin Hollinrake said: “Small businesses form a crucial part of large companies’ supply chains. Without them, they couldn’t do business. It’s only right that they should be paid promptly for their services. SMEs that are paid on time can do more business, scale up and make more profits, delivering growth for the economy.”

Reacting to news Ian Carrotte of ICSM said: “The new measures are welcome but don’t go far enough. Extending new reporting metrics, greater advice and broadening the powers of the Small Business Commissioner are good but legislation that makes it effectively illegal to deliberately pay late or not at all is what it needed and these proposals only hint at this possibility. With an election likely next year and the glacial speed any new legislation takes to get through parliament we won’t be holding our breath.”

He continued: “Many small firms are unaware of their rights to charge interest on overdue payments and to include court costs and fees from debt collectors. Worse still when some suppliers say they will enforce these statutory rights the clients will simply take future business elsewhere to a rival who they can bully. This is an ongoing problem that we at ICSM see every month from members.”

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ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com