Delegates at the National Enterprise Network’s 2024 Annual Conference had the opportunity to contribute to the latest legislative improvements intended to speed up payments for the micro and small businesses which make up almost half of the UK economy.
The UK’s Small Business Commissioner Liz Barclay held a workshop on the government’s new Fair Payment Code, helping attendees understand what is expected of businesses which gain the new Gold, Silver or Bronze Awards. For her, improving payments for micro and small businesses has been a 30 year mission.
“When I was in my early career as a journalist, I launched Wake Up To Money, and talked then about late payments and the impact they have on businesses and the economy,” she told delegates. “More than 30 years later, and three years into my role as the UK’s Small Business Commission, I am still trying to map out what the problem is that I am trying to fix.
“We know that payments lie at the heart of small business’ survival and that if they are not getting paid on a contract fairly, they won’t be able to keep the business going. Is this down to poor contracts, or poor terms, and is this leading to the vast increase in mental health problems we are seeing in small business owners? Making work pay is ok, but work has to pay for small business owners too as otherwise they can’t take a salary and invest in communities, staff and their business.”
The new code will reward businesses that treat their suppliers fairly and pay them quickly. It will also include an ambitious new Gold Award, which aims to make 30-day payments the new standard for which businesses can aim.
In addition, new legislation is being brought in which will require all large businesses to include payment reporting in their annual reports – putting the onus on them to provide clarity in their annual reports about how they treat small firms. This will mean company boards and international investors will be able to see how firms are operating. Enforcement will also be stepped up on the existing late payment performance reporting regulations which require large companies to report their payment performance twice yearly on GOV.UK.
FSB research shows that every quarter, 52% of SMEs in the UK suffer from late payments, meaning roughly 2.8 million small firms face this issue, with the Federation of Small Businesses describing it as one of the biggest problems facing SMEs.
Late payments are just one element of the problem, with some SMEs forced to wait months for contracts to be fulfilled and some are even forced to take out loans against their own homes to manage cash flow.
Cracking down on late payments will unlock growth for 5.5 million small firms by enabling them to invest their time hiring more employees, boosting wages, and exporting around the world, rather than chasing down late payments.
Find more information on the new Fair Payment Code here: https://www.smallbusinesscommissioner.gov.uk/new-fair-payment-code/