A new small business champion is on its way! The Government has decided that small and medium sized enterprises (SMEs) are being hard done by and “bullied” by large firms who do not pay for services, or delay payment by an unreasonable length of time.
It is estimated that small businesses are owed around £26 billion in late payments, and chasing these debts can cost millions more. A new mediation plan is being brought in to tackle the imbalance between small suppliers and big businesses.
Under new plans, firms will be able to seek advice and lodge complaints to a Small Business Commissioner. Companies that fail to pay their suppliers on time will be “named and shamed” after the Small Business, Enterprise and Employment Act 2015 made it compulsory for Britain’s biggest companies to report on their payment policies and practices.
The Federation of Small Businesses conducted research last year that found more than half of small businesses had been the victim of late payments within the last 12 months. Many small businesses end up going out of business not due to the lack of custom, but due to the lateness of payments.
Big businesses often don’t appreciate that dragging out payment just isn’t okay. A lot are not interested in negotiating mutually acceptable terms, relying on their status in the market place, and this often sees small businesses at a loss to what to do. Hopefully, with the introduction of the Small Business Commissioner, this imbalance will be levelled out.
The role of the new commissioner would include:
- offering access to mediation services to sort out issues quickly and affordably;
- being a point of first contact for small businesses and provide advice and support on how to avoid disputes and how to resolve them; and
- investigating complaints over unfair business practices and regularly report its findings.
This new small business champion should see life getting easier for SMEs and help businesses sit down and sort out their problems without having to enter into costly court proceedings. It will hopefully help SMEs grow and become more productive as cash flow will no longer be such an issue.
If you are currently having problems with payment contracts, or would like any other legal advice about your business please contact Slater and Gordon’s expert team of Business lawyers. Call us on freephone 0800 916 9052 or contact us online and we will call you.