Late payers to be flagged up to businesses under new proposals - Palmers Solicitors

Late payers to be flagged up to businesses under new proposals

Late payers to be flagged up to businesses under new proposals

The Small Business Commissioner, Paul Uppal, has recommended a new “traffic light” system that will warn smaller firms which businesses have a consistent record of late payment and those most likely to request longer payment terms.

It is thought that around £2.5 billion is lost annually within the economy due to late payments and they have been attributed to the closure of around 50,000 businesses each year.

Under the new proposals, current payment data collected by the Government will be used to highlight businesses with a poor record.

Large companies have been required to report supplier payment records twice a year since 2017 and so it is thought that the Government already holds a good record of poor payers. However, companies which fail to report payment practices will also receive a red light under the new system.

The Small Business Commissioner explained that his plans would allow smaller suppliers to make better decisions on who they work with.

The Government has outlined its own measures that will ensure that public contracts are only given to companies that can demonstrate prompt payment to their own suppliers.

At present, the Commissioner does not have the authority to distribute late payment fines, and his department only managed to recover £2.1 million in unpaid invoices his first year in office.

Carla Jones, an Associate in Palmers’ Commercial Litigation team, said: “Any initiative which helps to protect small businesses from the burden of bad debt is to be welcomed.

“Late payments often build up rapidly and can quickly have disastrous consequences. A ‘culture change’ to combat the crisis of late payments is long overdue and we can only hope that the small business commissioner’s recommendations are put into action as swiftly as possible.”

Carla added: “Palmers provides a debt recovery service that is straightforward, effective and can help your business deal with its invoice debts quickly and efficiently.

“Such services are vital at a time when there appears to be no end in sight for the late payments crisis.”

For more information about how Palmers can help, or to find out more about our Commercial Debt Recovery Scheme, please contact us.