Businesses of all sizes can often be adversely affected by the failure of others to pay their invoices on time. The impact of late payment on the business due the monies is well known, but have you ever considered the impact it may have on your business if you do not pay your invoices on time?
In an attempt to encourage businesses to make timeous payments and to curb the effects of late payments on small businesses in particular, the UK Government set up an independent public body known as The Office of the Small Business Commissioner ("The Commissioner"). The Commissioner has authority across the whole UK, and is an independent and impartial body, providing free advice to small businesses in relation to unpaid invoices and disputes with larger businesses. They also consider and investigate complaints about payment and make recommendations on how the parties should resolve disputes.
The government has proposed changes to the role of the Commissioner, which, if adopted, would considerably strengthen its powers.
The thrust of these proposed changes is that they will allow the Commissioner to further hold to account larger businesses that continue to pay small businesses late. Among the proposals, are powers to:
- hold company boards accountable for supply chain practices;
- compel larger businesses to disclose payment terms and practices;
- impose financial penalties on larger businesses found to have unfair payment practices; and
- impose binding payment plans on larger companies that fail to pay their debts in time.
Whether your business is small or large, the proposed changes outlined above are likely to have an effect on your business.