Chancellor Philip Hammond calls out late payment culture
Radical cultural change is needed to end the scourge of late payments, which puts 50,000 small firms out of business every year, the Chancellor Philip Hammond said today (18 July).
The Chancellor said companies must play by the rules because this unfair behaviour risks hampering the economy by restricting the growth of smaller firms, as he held urgent talks with business leaders in Downing Street.
More than one in ten firms (15%) struggle to pay their staff and other costs due to late payments. And research from Paypal and Xero has found that one in four small business owners (26%) are suffering from personal health issues due to concerns about late payments.
The talks – attended by leading business groups FSB and CBI as well as a number of firms – follow recent government action including proposals to fine those failing to comply with the rules and beefing up the Small Business Commissioner’s enforcement powers.
Discussions also covered the opportunities presented by innovative technology payment platforms to speed up payments between businesses.
The Chancellor of the Exchequer Philip Hammond said:
Today marks an important step forward in our work to tackle late payments. This unacceptable behaviour adds a financial and operational burden to small business owners, which is unfair and hampers growth.
We have already taken steps to wipe out the UK’s late payment culture. Businesses leaders were clear today that more can be done to end this blight - including through the use of innovative payment platforms.
Mike Cherry OBE, Federation of Small Businesses National Chairman, said:
Today’s roundtable strengthens the Government’s commitment to tackling the UK’s late payments crisis. It is a clear signal that they are listening to our small firms and our calls for urgent and radical action.
Poor payment practices hurt the UK’s small business community and holds back the economy. Large companies should treat their small suppliers fairly and pay them on time. Today marks the moment where politicians and business have come together to say - the UK is no longer a place where it is acceptable to pay small business late.
Small Business Minister Kelly Tolhurst said:
The vast majority of businesses pay their bills on time, with the amount owed in late payments halved over the last four years. But as a former small business owner, I know the huge impact a late payment can have on the ability to plan, invest and grow.
We recently announced ambitious new measures to ensure small businesses get paid on time. This includes holding company boards accountable for payment practices and proposed new powers for the Small Business Commissioner to tackle late payments through fines and binding payment plans.
Shining a light on the unacceptable late payment culture in this way is vital to ensuring that all small businesses are given the support they need and get paid quickly – a key part of our modern Industrial Strategy.
List of attendees
Rt. Hon. Phillip Hammond MP, Chancellor of the Exchequer
Robert Jenrick, MP, Exchequer Secretary to the Treasury
Mike Cherry, National Chairman, Federation of Small Business
Martin McTague, Policy & Advocacy Chairman, Federation of Small Business
Josh Hardie, Deputy Director-General, Policy and Campaigns, Confederation of British Industry
Emma Jones, Founder, Enterprise Nation
Paul George, Executive Director, Corporate Governance & Reporting, Financial Reporting Council
Tej Parikh, Chief Economist, Institute of Directors
Edward Berks, Director of Platform Business UK & EMEA, Xero
Eva Gustavsson Director, Corporate Affairs, Emea, Paypal.
Christian Keen, CFO, Holland & Barrett
Gareth Alexander, COO & Founder, Marketplace Systems Ltd
Jon Lewis, CEO, Capita
Kristen O’Connell, Founder & Director, Superlative Recruitment Ltd
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