Announcing a consultation on the issue, the Prime Minister has also said that the Government is considering whether legislation should be introduced to curb late payments. He will reveal later today (October 14) that 85 per cent of small and medium-sized enterprises (SMEs) have complained of problems receiving payments over the past two years.
Mr Cameron’s remarks come as a BBC investigation finds that the Prompt Payment Code, a scheme designed to encourage the big businesses to pay their suppliers faster, is not working. The investigation notes that research from the Federation of Small Businesses (FSB) has found that some of the signatories to the code have managed to stretch settlement periods to as long as 120 days, far longer than the 60 day limit set by the European Directive on late payments.
A spokesperson for the FSB said that the organisation is aware that around four in 10 businesses that are paid late will go on to pay their own suppliers late or struggle to pay their staff and added that it cannot be right that small businesses are being asked to lend to their large customers, which can only have a negative impact on their own growth and investment.
The Business Secretary, Vince Cable, has already warned larger firms this year that legislation could be brought in because so few have signed up to the Government’s code. In August, fewer than half of the FTSE 350 companies had signed up, which is a fraction of the UK’s four million businesses.
The Prime Minister will also announce a £2,000 tax cut, in the form of an employment allowance, for small businesses.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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