MPs urge 30-day payment rule for suppliers
By Sarah Wood | 5th December 2018
A group of MPs is urging the government to introduce tougher rules to tackle late payments to suppliers, including a 30-day deadline.
A report by MPs found bad payment practices, especially from larger companies, had caused some smaller businesses to collapse and had prevented the growth of many more, as reported by Sky.
The business committee examined the issue following the collapse of construction firm, Carillion , in January. The committee's inquiry into the collapse of Carillion heard that it was a notoriously late payer. The late payment report found poor payment practices were common across the construction industry.
Its recommendations included extending the Small Business Commissioner's remit to include the construction industry and to give it the power to fine companies who pay late in any sector.
The committee also called for all medium and large companies to be forced to sign the Prompt Payment Code. It said many larger companies deliberately pay late and take advantage of their suppliers, causing them financial instability.
The Federation of Small Businesses (FSB) backed the committee's call. National chairman, Mike Cherry, said: "The UK's economic success and productivity rests on the success of small and micro businesses. 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."
Punchline said: "We're all about supporting small businesses and, as a small business ourselves, we know what ti's like to be waiting for a late payment to come in. That's why we always ensure we pay our own suppliers on time. Let's hope the government listens to the recommendations from its own MPs and brings in these changes, in the interests of small businesses across the UK."
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