The Business, Energy and Industrial Strategy Committee’s ‘Small Business and Productivity’ report made the following recommendations:
- Require all medium and large companies to sign the Prompt Payment Code, and adopt statutory payments terms of no more than 30 days.
- Give the Small Business Commissioner powers to fine persistent late layers.
Jordan Marshall, IPSE’s Policy Development Manager, commented, “Big companies must stop exploiting the self-employed and small businesses by treating them as an additional line of credit.
“Government and industry should treat this report as a wake-up call.
“It is totally unacceptable that larger companies are building late payment practices into their business models, something the MPs described as ‘a particularly disgraceful form of market abuse’.
“IPSE strongly backs the recommendation to give the Small Business Commissioner real teeth, enabling him to fine companies who persistently pay late.
“We also back the call of the Committee to write the Prompt Payment Code into law, which would force companies to pay within 30 days or face automatic fees.”
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FSB National Chairman Mike Cherry, said, “The UK’s economic success and productivity rests on the success of small and micro businesses. This report sets out a clear challenge to Government.
“Critically the committee is right to have identified that the issue of the UK’s poor payment culture is crippling for many small firms.
“FSB has long highlighted that some larger companies exploit the imbalance of power with small suppliers to impose unacceptable terms, exceedingly long payment periods and late payments.
“This sort of behaviour is unacceptable and this cross-party group of MPs has rightly challenged the Government. Eliminating the scourge of late payments would see 50,000 businesses saved each year, add £2.5bn to GDP, which would be a real boost to UK productivity.
“Government must respond to this report with tough action on late payments, supporting smaller businesses to further develop their leadership and management capability and to improve the adoption of basic digital technologies that small businesses need to grow and become more productive.”
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