On Monday a Lincolnshire MP, John Hayes asked a couple of questions about business payments and the answer has raised several concerns. The two questions were both answered by Paul Scully who is the Parliamentary Under Secretary for the Department of Business, Energy and Industrial Strategy, so he is one of the team in BEIS which is run by Alok Sharma. One of the key elements of the response from Scully was was right at the end of his answer which was “Additionally, we will be consulting on strengthening the powers of the Small Business Commissioner to support small businesses that are exploited by their larger partners. Since launching in December 2017, the Small Business Commissioner has recovered £7.4 million owed to small businesses, as well as naming eight large businesses who had paid their small business suppliers late following the Commissioner’s investigation of a complaint.” The SBC has a website which is here and the 8 companies and the text are shown above. So one of my questions that will be shared by many other people in small businesses is which other companies are failing to pay within a reasonable time. We regularly get paid very late compared to our request for 14 days and sometimes it runs into months. Sadly on several occasions the run into months leads to the company going into liquidation and the payment never arriving. The second question in the light of this comment is what impact is it having on these companies given that G4S is one of a number of companies that receive a great deal of Government contracts? Anyway here are the two questions from John Hayes and then the first part of the answer from Paul Scully
JH: “What steps his Department is taking to ensure that invoices from small and medium businesses are paid on time by (a) Government and (b) non-governmental businesses”
“what estimate he has made of the number of (a) small and (b) medium businesses that have received late payment of invoices in the last five years in (i) Lincolnshire and (ii) the UK.”
PS: The Government’s manifesto commits to making sure that businesses are paid on time.
At the end of Q3 2019/20 (the most recent complete set of data):
7 of the 16 largest departments were meeting the target of 90% payment within 5 days.
13 of the 16 departments were paying at least 95% of their invoices within the 30 day target, with 5 departments achieving 99% or more.
The Government is also taking action to simplify the application process for small businesses wanting to supply to the Government and to increase visibility of subcontracting opportunities. Our ambition is that all departments pay 90% of valid and undisputed invoices from SMEs within 5 days and 100% of valid and undisputed invoices within 30 days.
The Government acknowledges that late payment remains a significant problem for small businesses, who are least able to cover financial shortfalls and find temporary finance more difficult and more expensive to obtain.
We have made it a legal requirement for the UK’s largest businesses to publish information on their payment practises, including the average amount of time taken to pay their suppliers.
Additionally, we will be consulting on strengthening the powers of the Small Business Commissioner to support small businesses that are exploited by their larger partners.
Since launching in December 2017, the Small Business Commissioner has recovered £7.4 million owed to small businesses, as well as naming eight large businesses who had paid their small business suppliers late following the Commissioner’s investigation of a complaint.