Businesses that delay payments to smaller companies may incur additional penalties
UK Government Unveils Comprehensive Small Business Plan
The UK government has announced a new Small Business Plan, aimed at addressing late payments to small businesses and providing financial support to help them thrive. The plan includes a range of measures, from tougher late payment laws to increased funding for start-up loans and mentoring programs.
One of the key features of the plan is the introduction of the toughest late payment laws in the G7. The government plans to cap maximum payment terms initially at 60 days and reduce them to 45 days, alongside fines and board-level accountability to ensure timely payments. This crackdown is designed to prevent the £11 billion annual economic cost and the closure of 38 small businesses each day caused by late payments.
In addition to addressing late payments, the plan includes a £4 billion financial boost. This includes 69,000 Start-Up Loans, mentoring, and support to help small and medium-sized enterprises (SMEs) thrive. SMEs, which employ 60% of the UK workforce and generate £2.8 trillion in turnover, will benefit from this support.
The British Business Bank is set to receive more than £3bn for guarantee programs to increase support to small businesses. This additional funding will bring certainty to spending programs for smaller businesses, according to British Business Bank chief executive Louis Taylor.
The government's plan also seeks to speed up resolutions to disputes. Changes to licensing for the hospitality and arts sector will be made to allow growth in designated zones. An independent body, the Small Business Commissioner, will be able to carry out spot checks and enforce 30-day invoice verification periods.
The British Chambers of Commerce (BCC) has expressed support for the government's steps to support SMEs. Late payments, access to finance, and business support have been identified as issues that have hindered smaller firms, according to the BCC. Small and medium sized businesses (SMEs) could be owed some £26bn due to late payments, which is preventing growth.
Tina McKenzie, policy chair of the Federation of Small Businesses (FSB), stated that tackling late payments is critical to boost communities and the wider economy. The FSB supports the government's efforts to create a fairer payment culture, reduce administrative burdens, and enable small businesses to focus on growth and job creation rather than payment disputes.
In summary, the UK government's Small Business Plan aims to create a more supportive environment for small businesses by addressing late payments, providing financial support, and streamlining administrative processes. The plan is expected to benefit SMEs across the country, stimulating local economies and unlocking growth.
[1] UK Government News Release, [Link to Source] [2] British Business Bank News Release, [Link to Source] [3] Keir Starmer Statement, [Link to Source] [4] British Chambers of Commerce Statement, [Link to Source] [5] Federation of Small Businesses Statement, [Link to Source]
- The UK Government's Small Business Plan, in addition to addressing late payments, includes a £4 billion financial boost for small and medium-sized enterprises (SMEs), which includes 69,000 Start-Up Loans, mentoring, and support.
- The plan also seeks to encourage investment in small-business, as the British Business Bank is set to receive more than £3bn for guarantee programs to increase support to small businesses.
- Recognizing the economic cost and number of small businesses closing due to late payments, the plan introduces the toughest late payment laws in the G7, aiming to cap maximum payment terms at 45 days and prevent £11 billion annual economic loss.
