New Government guidelines could see customers and clients ordered to pay a fine if they are late on clearing outstanding invoices.
The proposals have been made by Small Business Minister Paul Scully to help businesses manage their cash-flow during such a difficult period as the UK economy battles the effects of Coronavirus.
Recent estimates suggest that more than £20bn is owed to small firms in overdue invoices, which the Government believes is threatening the livelihood of business owners and their staff.
The scale of the issue is further underlined by recent findings from the Federation of Small Businesses, which suggest that 50,000 small businesses close each year as a direct result of customers and clients missing owed payments.
The new proposals outline six action points designed to give new powers to the Small Business Commissioner, which in turn could help small business chase down money they are owed with more authority.
- When a complaint against a company is investigated and upheld, it’ll be ordered to pay either through a lump sum or payment plan. If the company doesn’t comply, the Small Business Commissioner can issue further penalties and fines
- If the Small Business Commissioner is investigating a company’s payment practices, it can compel the company to share information
- The Small Business Commissioner can launch investigations into company payment practices without first receiving a complaint from a small business
- Expand the scope for complaints to the Small Business Commissioner, so it can investigate complaints relating to payment issues around the supply of goods and services
- The power to review other matters not strictly related to late payments, including supply problems or barriers to new payment technology
- The ability to claw back the cost of investigation against a company, when there are adverse findings
The proposals are currently at the consultation stage and small businesses are invited to provide their own views. Click here
What can you do about late payments?
Customers failing to pay on time can cost businesses dearly, both in terms of time and money, with business owners and finance managers pending hours every month chasing the missing amounts.
If you believe you’re owed money then there are several steps you can send a late payment letter outlining the amount owed.
It’s also important to state clear payment terms in your invoice, while building a close relationship with your clients and customers can help them understand your circumstances and the importance of paying on time.
Cooper Accounting works with businesses, partnerships and sole traders in Calderdale, Kirklees and beyond to manage cash-flow.
Get in touch for an informal chat.