Do the UK Government’s new Late Payment Proposals go far enough? (Spoiler alert – No) - Douglas Chapman

Late payments are a huge issue for business

Late payments which can be catastrophic for small businesses in terms of cash flow, debt and even bankruptcy

​The UK Government has already published highlights from its review which is due out in full later this autumn. This follows the announcement last Christmas on its consultation with relevant stakeholders to scrutinise existing practices and measures in combatting late payments which can be catastrophic for small businesses in terms of cash flow, debt and even bankruptcy. Attempts in recent years to improve the situation have included the introduction of the Prompt Payment Code and the appointment of Liz Barclay as Small Business Commissioner to hold non-compliant businesses to account.

However, numerous studies have shown that late payments have been on the increase during and post the pandemic. It’s certainly been a torrid time for businesses as they’ve also wrestled for survival against the-post Brexit “drag”, to quote Peter Foster in the FT, the terrible war in Ukraine, the crippling energy and cost-of-living crisis as well as rampant inflation. Given this backdrop, it seems imperative to support the few businesses that are left standing as well as encourage new ones to set up. Ensuring companies pay their bills on time should be a straightforward part of this, especially when the Federation of Small Businesses estimate that around 50,000 business closures could be avoided per year if invoices were paid on time.