The government has announced new measures to tackle the issue of late payments to small businesses.

Due to be published in the upcoming Prompt Payment & Cash Flow Review, the new measures include:

•Extending the Reporting on Payment Practices and Performance Regulations 2017. Following consultation, the government will take forward legislation to extend payment performance reporting obligations. It will include new metrics for reporting, including a value metric, so businesses and commentators can see the value of invoices, including invoices paid late, and a disputed invoices metric. 

•Providing 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 cashflow.

•Broadening 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. This will require primary legislation, so will be subject to the legislative timetable.

According to the government, paying small businesses on time could boost the economy by £2.5bn annually. “Late payment of invoices and long payment terms are key issues that businesses, especially SMEs, highlight as a barrier to their growth. Owners and managers are forced to spend disproportionate time chasing payments; resulting cashflow problems cause even good, viable firms to struggle.

“In 2022, small and medium-sized enterprises (SMEs) were owed on average an estimated £22,000 in late payments. Improving payment culture in the UK will support smaller businesses, many of which do not have the resources to accommodate long or late payments from their business customers and could boost the economy by £2.5bn annually.”

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.”

www.gov.uk