If you’re a small business owner, chances are you’ve faced the headache of late payments.
Whether it’s waiting on a big client or chasing unpaid invoices, this common problem is more than just an inconvenience – it’s costing small businesses an average of £22,000 a year.
Worse yet, it can even lead to business closures.
Thankfully, the government has unveiled a bold new support package aimed at tackling late payments, ensuring cash flow doesn’t become a nightmare for the 5.5 million small businesses across the UK.
Let’s break down what this new package means for you.
Fair Payment Code – A New Standard
A key part of this new initiative is the introduction of a Fair Payment Code, set to replace the old Prompt Payment Code.
Businesses signing up to this will have to prove they meet certain payment standards, earning gold, silver, or bronze status depending on how quickly they pay their suppliers.
This kind of recognition will help create transparency and accountability, shining a light on businesses that do right by their suppliers – and calling out those that don’t.
Holding Big Businesses to Account
The new measures are also set to include tougher laws, forcing larger firms to include payment reporting in their annual reports.
This added level of scrutiny means company boards and international investors will see exactly how these firms treat their smaller suppliers. In other words, there’ll be nowhere to hide for bad payment practices!
For small businesses, this is a breath of fresh air.
The government will also step up enforcement on existing rules, with directors of companies that fail to comply facing criminal prosecution and unlimited fines.
Consultation on Further Changes
In the coming months, the government will be launching a consultation to explore additional steps to tackle poor payment practices. The aim is to find even more ways to ensure that small businesses are protected and supported – because, let’s face it, the current situation just isn’t working.
As Small Business Minister Gareth Thomas rightly puts it: “Small businesses deserve to be paid on time, it’s as simple as that.”
What This Means for You
This crackdown on late payments could be a game-changer for small businesses.
No more chasing invoices or struggling to make ends meet because big companies are dragging their feet. Instead, you’ll have more time to focus on what really matters – growing your business, hiring staff, and boosting wages.
The Bigger Picture
The late payment problem is just one part of a broader set of issues that small businesses face. As part of this support package, the government is also committed to:
- Reforming business rates
- Boosting exports for small firms
- Supporting SMEs through a new industrial strategy
For businesses, this couldn’t come at a better time, with many firms, especially in the food and drink sector, struggling under the weight of late payments.
Get Ahead of the Game
At Accounts Direct, we’re here to help you navigate these changes and ensure your business stays on track.
Our expert team is ready to take the pressure off, so you can focus on what you do best.
Need help keeping your finances in check? Get in touch today and let’s get your cash flowing smoothly.