The UK’s SME and self-employed sector will be pleased to learn that the government has revealed new measures to tackle late payments.
According to the Smart Data Foundry, late payments are costing small businesses an average of £22,000 a year; Intuit QuickBooks found that this leads to 50,000 business closures a year.
The government has said it will consult on tough new laws which will hold larger firms to account and get cash flowing back into businesses.
As well as this, new legislation being brought in the coming weeks will require all large businesses to include payment reporting in their annual reports; providing clarity in their annual reports about how they treat small firms. This will mean company boards and international investors will be able to see how firms are operating.
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Responding to the news, Kate Shoesmith, Deputy Chief Executive, Recruitment and Employment Confederation (REC), said, “The new government had to act quickly on late payments given its drag on businesses’ cash flow, investment and innovation just when we need the economy to run smoother to drive growth.
“Recruitment is just one of the dynamic sectors hamstrung by late payments, with payment periods for suppliers of agency workers (who were paid that week by the agency) of up to 120 days demanded.
“We hope the promise of reform and consultation will help give employers the greater confidence in the economy they are seeking to move on their hiring and investing intentions.”
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