Big firms ‘ignoring’ late payment legislation
Late payments to suppliers have barely changed as large companies largely ignore new rules forcing them to declare their practices.
New data shows there has only been only a “slight improvement” in the number of late payments over the past five years,
Since “duty to report” legislation was introduced, the average time it takes a large business to pay an invoice has fallen by only one day, to 36 days, according the Chartered Institute of Procurement & Supply
Since 2017, qualifying businesses have been required to publish reports on payments to suppliers at least twice a year.
Despite being a legal requirement, the number of submissions to the database has fallen every year since 2019, with 15,087 submissions in 2019 but only 12,829 last year.
Terry Corby, chief executive of Good Business Pays, a campaign group, told The Times: “Some businesses are ignoring the regulations entirely and are failing to input their data.
“Not only is this against the law, but it is symbolic of a culture of disregard towards the impact of late payments and the rules in place to tackle it.
“The approach of relying on businesses to police themselves on this issue is failing and more robust penalties are needed to force businesses to properly engage.”
A government review of payment rules was completed this year and is due to report after parliament’s summer recess. The government indicated it is willing to take a tougher stance on enforcing payment rules.
Craig Beaumont, chief of external affairs at the Federation of Small Businesses, said one in seven of the UK’s largest companies were ignoring the rules.
He called on Rishi Sunak to intervene. “The prime minister could have an impact, making membership of his Business Council contingent on signing the prompt payment code, to pay small suppliers within 30 days,” he said.
A government spokesman accepeted that businesses “should not be forced to chase late payments, which can lead to cashflow problems, put their firms at risk, and prevent them from growing.”
A review is scrutinising existing payment practices, the prompt payment code, and other measures “to make sure small firms are fairly treated by their larger clients.”