Government explores new system of fines for late payments
Small businesses in the UK are owed more than £23.4 billion in overdue invoices, according to data from Pay.UK.
Late payments have been an issue that has plagued UK businesses for years, which is why the Government has proposed new rules, which could see late payers fined.
The proposals are part of a campaign and consultation launched by the Small Business Minister, Paul Scully, designed to help small businesses with their cash flow, which has been significantly affected by the Coronavirus pandemic.
The new consultation includes six key proposals designed to give new powers to the Small Business Commissioner and his department to help resolve late payment issues.
One of the main proposals will see companies ordered to pay, either through a lump sum or payment plan, if they leave invoices overdue for too long. This order will only be issued where a complaint is made against a business and upheld after investigation.
If a business ordered to pay late invoices continues to withhold payment, then the Small Business Commissioner will be able to issue further penalties and fines.
Where an investigation takes place following a complaint the Small Business Commissioner will also be given new powers to compel the company to share information.
The scope of complaints will also be extended so that the Small Business Commissioner can investigate complaints relating to payment issues around the supply of goods and services.
This will also allow the department to review other matters not related to late payments, including supply problems or barriers to new payment technology.
To reduce the financial burden on the Government, the Small Business Commissioner will be able to reclaim the cost of an investigation if there is an adverse finding against the company.
A consultation on these late payment proposals will remain open until 24 December 2020 and business can share their views here.
If you or a client is struggling with late payments and you are concerned about the business’s financial health, pleasespeak to our team.