The Federation of Small Businesses has responded to Labour leader Jeremy Corbyn’s plans to stamp out poor payment practices against small firms.
Mr Corbyn’s proposals were unveiled at a presentation to FSB members, were he outlined his plans to exclude late-paying large firms from public contracts, and to force big businesses being paid by taxpayers to pass on prompt payment requirements down the supply chain.
FSB National Chairman, Mike Cherry, said: “Small firms are facing a late payments crisis. We know from our research that around 50,000 small firms a year go bust as a result of unfair and lengthy delays in big business customers paying what they owe. Others often have to take out loans to cover the gap. These poor practices and wider supply-chain bullying have to stop.
The Government this month introduced a requirement for large companies to declare what percentage of their payments to smaller suppliers are settled within an acceptable 30 days; and what proportion go unpaid for an unacceptable 60 days or more.
Mike Cherry also welcomed Jeremy Corbyn’s pledge to exempt smaller firms from Government plans to replace annual tax returns with quarterly ones. Mr Cherry declared; “FSB research shows the potential burden these reforms will have on those least able to deal with it, with time and support costing more than £2,000 for an average small business. We agree there is a strong case to exempt firms below the VAT threshold of £83,000, as those above are already making quarterly returns and so are better able to cope. The Government’s one-year delay for these businesses should be made permanent.”