The Department for Business, Energy, and Industrial Strategy announced that for the first time, large businesses could be fined for failing to pay smaller suppliers on time.
The response has come at a crucial time, and not long after CRSE’s landmark report, ‘The Way to Wellbeing’, found that the lack of prompt payment contributes to financial worries and decreased wellbeing among all groups of the UK’s self-employed, especially those who have low earnings or work on a project-basis.
The report urged policymakers to improve wellbeing among the self-employed by considering their overall life satisfaction, based on various aspects of their lives including jobs, income, health and family life.
Key recommendations included prioritising solutions that reduce stress caused by irregular cash flows exacerbated by non or late payment, such as endorsing companies that exhibit best practice and scrutinising those who use exploitative practices.
In addition, the report recommended the Small Business Commissioner be given more powers to help enforce payment on behalf of the self-employed.
After a consultation on late payment, the Department for Business, Energy and Industrial Strategy announced that it would introduce new measures to improve payment culture. These include:
- Proposed new powers for the Small Business Commissioner to tackle late payments through fines and binding payment plans.
- Company boards to be held accountable for supply chain payment practices for first time.
- New fund to encourage businesses to use technology to simplify invoicing, payment and credit management.
The Department also propose to give new powers to the Small Business Commissioner, which include compelling information and disclosure of payment terms and practices and imposing financial penalties and binding payment plans on large businesses found to have unfair payment practices.
Chloe Jepps, Secretary of the CRSE said:
“The CRSE welcomes the Government’s decision to adopt new measures to improve payment practices.
“Putting these measures in practice is absolutely essential as improving late payment culture can help decrease stress and financial worries among the UK’s self-employed.
“Promoting shorter payment time frames and making it easier to enforce payments will also contribute to better overall financial health and wellbeing for both those who are entering self-employment and those who have been self-employed for the long term.
“The announcement is a welcome step in the right direction.”
Read the full response to the consultation here.