New proposals requiring large companies to publish detailed information about their payment practices have been unveiled by business minister Matthew Hancock.
The move follows a government announcement in June to tackle late payment and is intended to provide robust information, making it easier for small businesses to compare companies with good payment records to those found to be less reputable.
The new obligation has been developed in response to feedback from an earlier consultation – Building a responsible payment culture – where a clear majority of respondents supported increased transparency. The requirement would act alongside the Small Business, Enterprise and Employment Bill, which is currently going through Parliament. Under the proposals, reporting on a quarterly basis will be a mandatory requirement for all large and quoted companies.
Matthew Hancock said: “Tackling late payment is at the heart of our drive to help small businesses. Coming from a small business background, I know just how critical late payment can be for small firms’ cashflow. We want to tackle the underlying culture by increasing transparency on payment practices and performance.
“The measures we are consulting on will make it clear to small businesses and consumers alike which large businesses behave properly, and those that think they can ride roughshod over their suppliers.”
The government’s consultation on the proposals is requesting views on the rules, which would see companies disclose all relevant information regarding payment practices, including on their websites, with fines liable for those breaching the requirement.
Philip King, chief executive of the Institute of Credit Management, said: “Transparency is a key element in changing culture across many aspects of business, and payment behaviour is no exception. I applaud the measures in the Small Business Bill to drive change by allowing more visibility of how businesses behave in paying their suppliers. Small businesses need to make better informed decisions before entering into commercial relationships and this measure will be invaluable in helping them enter into such relationships with their eyes wide open.”
The government’s consultation coincides with a new survey released jointly by the National Specialist Contractors Council (NSCC) and the Federation of Master Builders (FMB). It found that 92% of NSCC and FMB members agree contractual payment terms with their clients of 45 days or less, but only 57% of members actually receive payment within those terms. This shows that, although contractual payment terms are improving, late payment is still rife within the supply chain and more needs to be done to ensure payments are made within terms.
Speaking at the NSCC Annual Lunch on November 26, where the results were published, NSCC President Kevin Louch said: “We are still facing the all too familiar issue of late payment. If we are to successfully address this and other longstanding issues within our industry, there needs to be a major shift in how we operate. Throughout the supply chain we need to be on the same level talking the same language and then we can make this industry work for all of us.”
To take part in the government’s Duty to Report consultation, click here
To view the Credit where credit isn’t due report from the NSCC and FMB,
