Minister moves to end late payments for one-person firms

A government move to both act and ask on being paid late as a one-person business is being universally backed by the self-employed's supporters, even though its aim sounds a bit optimistic.

Alongside a package of anti-late payment proposals, tied to a way for people to give feedback, the government said its actions would, miraculously, “end the problem of late payments”.

Using more proportionate language, the Federation of Small Businesses (FSB) said it was "good" to see the government "getting serious" about late payment, seeming to imply that entirely eradicating them is unrealistic.

'Very welcome'

IPSE, the contractor trade group, added its backing too, saying the new package of measures was "very welcome," although it noted it was to tackle a problem that had existed "for too long."

Overdue or not, the package stands to directly affect the likes of IPSE and the FSB, as one of the proposals is for business associations to highlight the best and worst payment practices.

It will likely be less than the 'naming and shaming' power in reserve at the Small Business Commissioner’s office however, given that the highlighting is designed to simply "deliver practical improvements."

'Bully'

More affecting of large companies -- who, according to the FSB, still 'bully' small traders trying to do business in Europe by pushing them for a discount merely to pay promptly, is the 'board-level' proposal.

Specifically, the government wants to know if giving a non-executive director "responsibilities" for their company's prompt payment performance could work

Since 2017, large companies have been under a duty to report on payment practices and policies, resulting in some 6,500 reports by corporates on their payment performance.

'Flouted'

And recently introduced legislation requires all large companies to include in their annual reports a statement of how directors have fostered the company’s relationships with stakeholders, including suppliers.

But not dissimilar to the voluntary Prompt Payment Code, which the call for evidence acknowledges might now be being "flouted" by some signatories, the government says "more can be done."

Reiterating its bold aim to entirely "eliminate" the problem of late payment, small business minister Kelly Tolhurst MP signalled that the government would call on technology.

'Technology'

In particular, she wants to know if by promoting innovative technologies, such as accounting software, large (and small) firms can be helped to manage their payments processes more effectively, such as with more seamless invoicing.

"Evidence suggests that it is the processing of invoices which often leads to the delay in payment," the business department says in its call for evidence.

"What are the main barriers in using technology to enhance the payments process?" the department asks, addressing contractors and other potential respondents. "What could be done to encourage greater take up"?

'Joined-up'

Before the evidence-call was published (it is open for responses until November 29th), the Small Business Commissioner joined the Prompt Payment Code’s Compliance Board.

The government said commissioner Paul Uppal's appointment to board will support his role in tackling late payment, and, in future, it will be considered whether he should have a greater role in its administration.

The FSB applauded the development, saying it shows the government is taking "a more joined-up approach" to late payment -- which hits six in 10 traders, and among contractors, IPSE says, wastes up to 20 days a year and costs an average of £5,400.

But the ultimate solution is to let the commissioner bite those who leave their suppliers out-of-pocket, believes Andy Chamberlain, deputy director of policy at the Association of Independent Professionals and the Self-Employed (IPSE).

"The only way to truly turn poor payment culture around is to fine persistent offenders...[so] we will be arguing the Small Business Commissioner should be given this power," he said.