ICAEW backs new SBC late payment powers
2 October 2020: Government proposals to hand the Small Business Commissioner powers to fine companies that do not pay small businesses promptly have been strongly endorsed by ICAEW.
ICAEW has welcomed new government proposals to ensure small businesses in the UK are paid on time. A consultation launched by Small Business Minister Paul Scully aims to tackle the issue of late payment.
Under the proposals, new powers granted to the Small Business Commissioner (SBC) would include:
- The power to order companies to pay their partners, either as a lump sum or agreed payment plan, when a complaint against them for late payment has been investigated and upheld. Companies which do not do so could face further penalties, including fines. This will give a clear incentive for companies to pay their partners on time
- The power to compel companies to share information during an investigation by the SBC. This will ensure cooperation with SBC investigations and provide more information about company payment practices
- The power to launch investigations into suspected bad payment practice, without the need to have first received a complaint from a small business
- Expanding the scope for complaints to the SBC, to allow the Commissioner to investigate complaints about other businesses relating to payment matters in connection with the supply of goods and services
- To review and report on wider business practices outside of payment matters, on instruction of the BEIS Secretary of State. This could be practices unrelated to payment matters specifically impacting small businesses such as supply problems, or broader issues like barriers to the adoption of payment technology
- The power to claim investigation costs from an investigated company when there are adverse findings against them.
According to the Federation of Small Businesses (FSB), around 50,000 small companies close each year due to late payments, and figures released by Pay.UK estimated that £23.4bn worth of late payments is currently owed to small businesses in the UK.
Iain Wright, ICAEW’s Director of Business and Industrial Strategy, said that while most companies appreciate the importance of a viable and healthy supply chain and respect their suppliers by paying them promptly, some do not.
“By paying late, they endanger the livelihoods of many small businesses and their employees, especially in these difficult and precarious economic conditions,” said Wright.
“The Small Business Commissioner has already helped secure prompt payment for Chartered Accountants working in business. These proposed new powers will go even further in punishing and exposing bad corporate behaviour, create a responsible culture of prompt payment and safeguard the existence of many small businesses across the country.”
The Office of the Small Business Commissioner was established in 2017 by the previous government to address the issue of late payments. Since then, the SBC has claimed £7.5m owed to small businesses and publicly named eight companies for poor payment practice.
Speaking at an ICAEW webinar in April, interim Small Business Commissioner Philip King told delegates that small businesses should contact the Small Business Commissioner’s office if they have any late payment or poor payment issues. “Finance professionals need to see the way payment culture is changing and make sure they are on the right side of it,” said King.
The consultation opens today and will run until 24 December 2020. Businesses are invited to share their views here.