June 05, 2014 - Rachel Miller
Business secretary Vince Cable has set out new proposals to help small firms get paid on time. The new measures will require larger firms to publish information on their payment practices.
Cable said: "For too long too many large companies have been getting away with not paying their suppliers on time to maximise their profits. It is small business that is suffering as a result and it needs to stop. We will now make it compulsory for large companies to publish information about their payment practices so that those who are not playing fair can be held to account."
The new measures come as the government responds to a new discussion paper entitled Building a Responsible Payment Culture.
John Allan, national chairman of the Federation of Small Businesses (FSB), said: "Small businesses can no longer be expected to lend interest free to large businesses. A key test will be whether the big companies who sign up to the Prompt Payment Code actually now start to pay within 60 days, something they should be doing under the existing EU Directive. We need to see more of the detail in today's announcement because small businesses need tough action from the government on late payment."
The ICM also called for more clarity from the government. Although it welcomed the measures, it said that the Department for Business, Innovation and Skills (BIS) has "ducked the issue" regarding the rights of business to challenge "grossly unfair" terms by failing to define what grossly unfair terms might be.
Philip King, ICM chief executive, said: "There clearly comes a point when the terms of payment should be deemed unfair, for example when they are imposed by the buyer without consultation or negotiation, when they are retrospectively applied to contracts already in place, and/or where they are demanded in circumstances that will clearly be to the detriment of the supplier and exploiting the weakness of his bargaining position. We articulated this view in our official response, but it appears the issue has been ducked."