Proposals for a new Small Business Commissioner to lead a cultural change in how small businesses resolve payment disputes with larger companies have been set out by the government.
The problem is significant. In July 2015, Bacs reported that small and medium businesses are owed a total of £26.8 billion in overdue late payments and that £10.8 billion is spent per year in attempts to recover overdue payments. Clearly the resource implications are considerable and the problems late payment can cause for cash flow can severely impact on a small business survival.
The Small Business Commissioner would help small business handle these disputes over late payment and other supply chain practises that hit them especially hard. It would be a point of contact for small businesses and provide advice and support on how to avoid disputes with larger companies and on how to resolve them. It would also offer access to mediation services to sort out issues quickly and affordably at a fraction of the cost of going to court. It would have the power to look into complaints and report on its findings.
The role delivers on the government’s pledge to deliver a small business conciliation service and goes further to ensure that the unacceptable payment practices that hit small firms are addressed. Small Business Minister Anna Soubry said:
“The government is backing small business to grow and create more jobs and opportunity. Small businesses are owed £26 billion in late payments and spend millions chasing down money they have already earned through hard work. This is simply unacceptable – it limits their growth and productivity and can put an otherwise successful business at risk.
The Small Business Commissioner will tackle the imbalance of bargaining power between small suppliers and large customers, and encourage them to get round the table and sort out disputes at a fraction of the cost of going to court. It will also provide advice, investigate complaints, and see where further action is needed to clamp down on unfair practices.”
This is one of a number of measures to tackle late payment. The Small Business, Enterprise and Employment Act 2015 has already introduced a reporting requirement for the UKs largest companies to report on their payment policies and practices. The Small Business Commissioner role takes this further and will be able to use this data to name and shame those whose payment practices are below standard and to celebrate those leading the way by paying promptly.”
It is a cultural change that is required and if businesses of all sizes start to promote best practice in this area then the we may start to reduce the impact that bad payment practices have on cash flow and ultimately on small business survival.
The closing date for the consultation is 21 August and the Department for Business, Innovation & Skills (BIS) is calling for contributions from companies of all sizes. Why not have your say? They want to know about the views of business, further evidence about the problems and how the proposed Commissioner can help. To take part, go to the following link where you can complete a response form. https://www.gov.uk/government/consultations/small-business-commissioner-role