New proposals have just been published by the Business Minister Matthew Hancock at the department of Business, Innovation and Skills (BIS) obliging large and listed companies to publish detailed information about their payment practices and performance.
The government is to consult on further measures to tackle late payment, but this new mandatory reporting regime could help small businesses identify the best paying large companies, and highlight bad practices part of wider package of changes to change culture.
The proposed changes will insist on more robust information making it easier for small businesses to compare the role models with the less reputable. Specifically, the average payment time; the proportion of invoices paid beyond terms; and the proportion of invoices paid within 30 days, over 30 days, over 60 days and over 120 days.
The new proposals increase transparency and show how the government intends to use the prompt payment power in the Small Business, Enterprise and Employment Bill which is currently going through Parliament. Reporting on a quarterly basis will be a mandatory requirement for all large and quoted companies. The full Press Release from BIS is here.
Interestingly in today’s FT, Sarah Gordon, business editor has an article suggesting that one in five suppliers are being bullied by the big companies they supply, according to research by the Federation of Small Businesses. In the article, these findings, which the FSB said provided “alarming evidence” of the extent of the mistreatment, come in the wake of Tuesday’s announcement by Tesco that it was revising the supply chain practices that led it to overstate profits by £250m and after Premier Foods caused a political storm by issuing hundreds of small food suppliers with a demand they “pay to stay” on its list of contractors.
Cheriton Financials has been lobbying for the past year or so to see these improvements in the regulatory regime. This is a good step forward, but it is important that we don’t see this being watered down as the bill progresses through Parliament; we want to see teeth being given in the legislature to ensure that existing bad practices are brought to heal and not for big business to hone it down in the process…
- One in five suppliers bullied, says UK small business lobby - The Financial Times (sign-up required)
- One in five suppliers has been 'bullied' by large company - Daily Telegraph
- New proposals to tackle late payment - Department for Business Innovation & Skills
- Government action on late payment: A step forward but not far enough - Business Zone
- We'll end scandal of £40bn owed to small firms by larger customers, pledge Tories - Mail Online