As PYMNTS reported on earlier this week, U.K. small businesses are losing hope that government officials can successfully tackle the issue of late payments. Despite a government-backed Prompt Payment Code, which sees some of the largest corporations signing a pledge to pay their small suppliers on time, SMEs in the nation are continuously reporting cash flow problems because their large buyers are not paying them on time – and often for no apparent reason.
But reports emerged Monday (March 23) that could renew faith among U.K. SMEs for late payment reform.
Existing lawmakers have promised to introduce legislation that would crack down on late payments if they retain their positions following the general election this May. The rules, reports said, would require corporations to publish information detailing how long they take to pay their suppliers.
These rules would take place in April 2016, reports said.
The Department for Business, Innovation & Skills’s proposal would likely survive regardless of the outcome of the election, experts said. The regulations would require major corporate buyers to publish the payment terms, payment timelines, and other details regarding their invoice settlement practices.
“We are determined to make Britain a place where late payment is unacceptable and 30-day terms are the norm – with a clear 60-day maximum,” said Business minister Matthew Hancock. “We’ve acted to ensure all public payments do that, right down to the supply chain, and are bringing in new strict transparency rules.”
The Department’s proposal is not new, and has been circulating through Parliament for several months. Critics of the legislation say there is not incentive for corporations to accurately report their payment practices, leaving a wide margin for inaccuracies.
But the regulation would also introduce a new payment portal through which the government would collect information related to supply chain financing, e-invoicing and dispute resolution between buyers and suppliers. The businesses would also provide their status in terms of membership of best practices, including their adherence to the Prompt Payment Code.