The battle to clamp down on late-payers and poor payment practice continues, with several developments in the pipeline.
From April, every large company will be required to report back on its payment practices and will have to publish this report twice a year. FSB secured this ‘duty to report’ in 2016, so we are delighted to see it delivered, and that it will be enforced.
Alongside this measure, Government will soon appoint a Small Business Commissioner, as promised in the Conservative Party manifesto, who will have the power to call in and challenge firms about poor practice. FSB Chairman Mike Cherry has been invited on to the interview panel for the role, to make sure the final candidate is a champion for small business.
The most recent FSB pressure has been aimed squarely at No.10, to refocus a major Green Paper on corporate governance led by Theresa May.
There is now a proposal – due solely to FSB – for large businesses to appoint a board member to look after supply chain respect, and to report back on progress. The hope is that this will ensure a whole-board approach to good payment practice, rather than a race to the bottom with the finance director squeezing cashflow out of small suppliers.
A recent report by FSB into late payment helped to secure the inclusion. It found 30 per cent of payments to small firms are late, with 38 per cent saying they had experienced cash flow difficulties as a result.
“We are in a late payments crisis and things are getting worse,” said Martin McTague, FSB Policy Director. “It’s also poor payment, with practices such as charging companies to be on a supplier list, or querying an invoice on day 59 of a 60-day term to reset the limit. We’ve also heard of businesses using Brexit as an excuse to pay suppliers late.”