BEIS call for Small Business Commissioner to fine late paying firms

The Association of Independent Professionals and the Self-Employed (IPSE) welcomes the government’s call to allow the Small Business Commissioner to fine companies who pay contractors late.

An issue for so many smaller sized businesses across the UK, late payments can have such an incredibly detrimental effect on the development of an SME.

In January, new public data analysed for the first time by Lloyds Bank Commercial Banking in partnership with the Small Business Commissioner, revealed statistics around large business payments:

• 65% of large businesses have an average bill payment time of more than 30 days
• companies in London are the most prompt – paying bills in 34 days followed by those in the South West, paying after 35 days
• conversely, companies in Yorkshire and the Humber have the worst record with payments taking 43 days, followed by companies in Northern Ireland and East Midlands with an average payment time of 41 days
• only 14% of companies from the 7,010 analysed, reported payment terms of 19 days or under.

At the time, the Small Business Commissioner, said, “Our initial findings indicate that almost two-thirds of payments are likely to be owed to smaller businesses at any time. This is money that could be used to grow smaller businesses and generate tangible economic activity. Instead, it is stuck on the ledgers of large businesses doing nothing.”

Now, the Business, Energy and Industrial Select Committee’s (BEIS) have called to allow the Small Business Commissioner to fine companies who pay contractors late.

IPSE Senior Policy Advisor Jonathan Lima-Matthews commented, “While the Government is making a concerted effort to address the scourge of late payment, it does appear to be locked in a holding pattern of consultations on this blight on self-employment.

“IPSE research has shown freelancers spend an average of 20 days a year chasing late payments, with 43 per cent doing work they were not paid for at some point in their career.

“The situation is critical in the creative sector, where freelancers have been found to lose a staggering £5,400 a year on average.

“We agree with the BEIS Select Committee’s calls for the Small Business Commissioner to fine companies who pay freelancers late, and building on this, we urge the Commissioner to roll out his new ‘traffic light’ system to shine a light on bad practice.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.