- Nick Elvin
The proposed changes are aimed at making it easier for small businesses to compare the average payment time of these firms; the proportion of invoices paid beyond terms; and the proportion of invoices paid within 30 days, over 30 days, over 60 days and over 120 days.
The new proposals, which are now subject to a consultation, show how the Government intends to use the prompt payment power in the Small Business, Enterprise and Employment Bill, currently going through Parliament. Reporting on a quarterly basis would be a mandatory requirement for all large and quoted companies.
Mr Hancock said late payment can be critical for small firms’ cashflow, however companies are often reluctant to risk losing business by using redress measures.
“We want to tackle the underlying culture by increasing transparency on payment practices and performance,” he said.
“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 consultation, which runs until January 13, asks for views on the proposals that would see companies reporting on a quarterly basis; reporting on standardised metrics on payment performance; disclosing additional narrative information on payment practices; publishing the information on their website; and facing fines for breach of the requirement.
Responding to the proposals, Samantha Hurley, head of external affairs and Compliance at The Association of Professional Staffing Companies (APSCo) said: “BIS (The Department for Business, Innovation & Skills) actually took some time to engage with our members directly on this very important issue at our members’ meeting back in July.
“We welcome these proposals although we would add a note of caution in that we would not want the measures to be over burdensome – and we hope that, as outlined at our members’ meeting – the Government recognises the need to have a sector based approach.
“In fact, at our meeting in July, BIS said that they would like companies to link to sector based codes such as the APSCode – a code of conduct for RPO and MSP members which addresses some payment culture issues – in particular pay when paid clauses and non-assignment of debt. We await the results of the final consultation with interest.”