Government announces prompt payment review
5 December 2022
Business Secretary Grant Shapps has announced an in-depth review into payment practices to prevent small firms from squeezed by larger companies and ensure they are paid promptly.
Small businesses routinely spend significant time and resources chasing late payments from businesses they supply which can lead to cash flow problems. The Payment and Cash Flow review will scrutinise existing payment practices, with over £23.4 billion currently owed in outstanding invoices to UK businesses, according to the government.
The review will consider the progress made in specific sectors of the economy in combatting late payment and will also include an in-depth examination of current payment reporting regulations and the Prompt Payment Code.
In addition, the Procurement Bill is currently being debated in Parliament, proposing legislation setting out the requirement for 30-day payment terms to apply in public sector supply chains, helping to encourage more SMEs (small to medium enterprises) and businesses with smaller budgets to bid for public sector contracts
The role of finance, particularly how major banks and new lenders can help small businesses manage their cashflow and identifying barriers to accessing finance, will also be part of the review’s remit.
● The blog recently reported on measures that have been put in place to make it easier for SMEs to tender for public sector contracts.
Image: Gerd Altmann