Department for Business, Innovation and Skills
New commissioner to tackle late payment culture
The government sets out proposals for a Small Business Commissioner to help tackle payment disputes and other unfair practices.
Proposals for a new Small Business Commissioner to lead a culture change in how small businesses resolve disputes with larger companies have been set out yesterday (26 Jul 2015).
The Small Business Commissioner would help small businesses handle disputes over late payment and other supply chain practices that hit them especially hard. It would help small firms access advice, support, mediation and conciliation services, and have the power to look into complaints and report on its findings.
This delivers on the government’s pledge to deliver a small business conciliation service and goes further to ensure we fundamentally tackle unacceptable payment practices that hit small firms.
Small Business Minister Anna Soubry said:
The government is backing small businesses to grow and create more jobs and opportunity.
Small businesses are owed £26 billion in late payments and spend millions more chasing down money they have already earned through hard work. This is simply unacceptable – it limits their growth and productivity, and can put an otherwise successful business at risk.
The Small Business Commissioner will tackle the imbalance of bargaining power between small suppliers and large customers, and encourage them to get round the table and sort out disputes at a fraction of the cost of going to court. It will also provide advice, investigate complaints and see where further action is needed to clamp down on unfair practices.
This is one of a number of measures to tackle late payment. The Small Business, Enterprise and Employment Act 2015 introduced a reporting requirement for the UK’s largest companies to report on their payment policies and practices.
The Small Business Commissioner will be able to use this data to name and shame those behaving badly and celebrate those leading the way by paying promptly.
Notes to editors:
- The Small Business Commissioner will:
- be a point of first contact for small businesses and provide advice and support on how to avoid disputes with larger companies and on how to resolve them
- offer access to mediation services to sort out issues quickly and affordably, at a fraction of the cost of going to court
- investigate complaints over unfair business practices and regularly report its findings
- In July 2015, Bacs reported that small and medium businesses are owed a total of £26.8 billion in overdue late payments and that £10.8 billion is spent per year in attempts to recover overdue payments.
- An FSB survey of its members in 2014 revealed that 51% had experienced late payment within the previous 12 months.
- Over half of the cases handled by the Victoria Small Business Commissioner in Australia were successfully resolved, at 30% (or less) of the cost of taking legal action. Over half of the complaints were resolved within 1 week, and 80% within 12 weeks.
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