Large organisations that fail to make payments on time to small businesses could be “named and shamed” after the government said it would appoint a Small Business Commissioner to tackle payment disputes and other unfair practices.
The government says it wants to lead a “culture change” in how small businesses resolve disputes with larger companies after latest monthly figures from Bacs reveal SMEs are owed a total of £26.8 billion in overdue late payments.
The Small Business Commissioner would assist small businesses in handling disputes over late payment and other supply chain practices that hit them especially hard.
It would help small firms access advice, support, mediation and conciliation services, and have the power to look into complaints and report on its findings.
Small businesses currently spend £10.8 billion a year attempting to recover overdue payments.
Small business minister, Anna Soubry, said: “The government is backing small businesses to grow and create more jobs and opportunity. Small businesses are owed £26 billion in late payments and spend millions more chasing down money they have already earned through hard work. This is simply unacceptable – it limits their growth and productivity, and can put an otherwise successful business at risk.”
Souby said the Small Business Commissioner will tackle the imbalance of bargaining power between small suppliers and large customers, and encourage them to get round the table and sort out disputes at a fraction of the cost of going to court.
“It will also provide advice, investigate complaints and see where further action is needed to clamp down on unfair practices,” she added.
The Small Business, Enterprise and Employment Act 2015 contains a reporting requirement for the UK’s largest companies to report on their payment policies and practices.
The Small Business Commissioner will be able to use this data to name and shame those behaving badly and celebrate those leading the way by paying promptly.