UK government launches a review of Payments and Cash Flow
To prevent small businesses from being ripped off by larger companies, the Payment and Cash Flow review will examine existing payment practices.
Business Secretary Grant Shapps has announced The Payment and Cash Flow review to tackle late payments for small businesses.
There are currently £23.4m in outstanding invoices for small companies, which will be scrutinised as part of the review.
Specifically, the review will examine:
Incorporating technology into accountancy platforms to combat late payments and improve small business understanding of prompt payment practices
Managing cash flow for small businesses with the help of banks and innovative lenders, especially the role of finance
The barriers to accessing finance
There will also be a consultation on the payment reporting regulations, which will outline specific proposals for renewal and improvement.
Shapps said: “The UK’s 5.5m small businesses are an integral part not just of our economy, but of our communities too and this government is firmly on their side. That many small firms are routinely paid late is intolerable and presents a real barrier to productivity, the creation of high-skilled jobs and ultimately economic growth. I also want to remind big businesses of their duty to ensure their smaller suppliers are paid promptly.”
Also in parliament, the Procurement Bill is being debated. In the public sector, 30-day payment terms will apply, which will encourage more small businesses with small budgets to bid on public projects.
Additionally, the Small Business Commissioner's role and effectiveness will be reviewed based on the consultation conducted in 2020 on the Small Business Commissioner's powers.
“I know the joy and freedom of owning and running your own business, but also know what it’s like to lay awake at night and worry about paying the bills,” said Minister for Small Business, Kevin Hollinrake.
“We’re really keen to launch this review. We’re looking at the progress we’ve made so far, what we’ve learned, but also what else we can do, particularly in the context of reporting, the Prompt Payment Code (PPC) and the Small Business Commissioner.”