The Forum of Private Business has released a manifesto outlining what the next government should do to support small businesses. With BACS reporting that chasing late payment costs businesses £9.2bn a year, prompt payment remains top of the agenda. The Manifesto sets out measures for the start, mid-term and end of a term in Parliament, with the objective of helping a future government “realise an even stronger, resilient private sector that will be well-placed todrive the economy forward to record rates by 2020.”
Key actions for government:
1. Announce plans to create a code or regulator to oversee the relationship between suppliers and retailers in the UK. It is time for government to denounce the over-reliance of larger retailers on cash flow support from their supply chains, leading to damaging demands, lengthy payment terms and late payment to small businesses.
2. Amend current legislation to faithfully transpose the EU Directive on late payment. With £46bn tied up in late payment, the EU has provided the tools to challenge poor practice, but requires government to transpose ‘grossly unfair’ terms into UK law
3. Set up an advisory board for the Prompt Payment Code and put in place a more robust monitoring structure to ensure companies are worthy of signing it.
Reporting on ethics in business form its members the FSB also made the following recommendations:
1. The next government should commit to harmonise payment practices across the EU at 30 days within the next 5 years. This would send a clear message that extended payment terms are no longer acceptable and would incentivise businesses to change their systems ahead of a given implementation date. Non compliant businesses would be obliged to publish reasons for delayed payment.
2. Government should extend its 10-30 day payment policy to include local authorities, councils and the NHS
3. Non-signatories to the Prompt Payment Code (PPC) should be disqualified from winning public sector contracts
4. A further tightening of the Prompt Payment Code is needed to give businesses, councils and government bodies the confidence to stipulate its use Providing industry standard terms would also would also support a better payment culture and eradicate lame sector-based excuses for late payment.
5. The next government should push ahead to get large companies to report on payment terms and practices as a matter of urgency as outlined in a recent consultation Duty to Report on Payment Practices and Policies