As the latest Government data reveals over £23.4 billion in outstanding invoices owed to small companies, Business Secretary Grant Shapps has launched a review to tackle late payments. With small-scale businesses struggling across the UK, our Business Recovery and Insolvency experts outline the UK Government’s response.
Business Secretary Grant Shapps has announced a comprehensive review that aims to combat late payments to small businesses, while pushing for large clients to promptly pay their smaller suppliers the funds owed. The announcement has been made in response to significant frustration expressed by owners of small businesses.
Small businesses have continuously struggled with the longstanding challenge of chasing late payments from larger companies, costing them significant time and resources that often result in cash flow difficulties.
Unlike more sizeable enterprises, smaller business owners do not benefit from larger balance sheets and, therefore, are more vulnerable to mounting financial pressures because of payment delays.
What does the late payments review include?
The newly launched ‘Payment and Cash Flow review’ intends to address the issue of late payments by examining current payment practices and the measures in place to ensure small firms are not taken advantage of by larger corporations.
The Government’s late payment review also involves an in-depth evaluation of the Prompt Payment Code and other existing payment reporting regulations.
In addition, UK ministers will assess how lenders can support small businesses to manage their cash flow and identify the obstacles encountered by the majority of smaller companies when accessing finance.
In the Government announcement, Business Secretary Grant Shapps stated: “The UK’s 5.5 million small businesses are an integral part not just of our economy, but of our communities too, and this government is firmly on their side.”
He added: “This review will allow us to build on the success we have had so far in curbing late payment, unshackling small businesses from this exploitative practice, and creating a system that is fit for the future. While we crack on with this work, I also want to remind big businesses of their duty to ensure their smaller suppliers are paid promptly.”
Full details of the recent announcement can be found on the Government website.
How PKF Smith Cooper can help
Here at PKF Smith Cooper, we understand the financial pressures that many small businesses are currently enduring across the UK, but we can help you find solutions when the options may appear limited.
Our mission is to provide tailored financial advice that your company can rely upon.
If your business is currently in financial difficulty and experiencing problems with its cash flow, get in touch with us today. Our team of accredited business recovery and insolvency practitioners has extensive experience in supporting companies like yours.