Welsh SMEs to Benefit from 'Toughest Laws on Late Payments in the G7'
The move is part of the UK Government's Small Business Plan, which it says will help make the UK the best place to start and grow a business, with a culture that supports entrepreneurship.
The Small Business Commissioner will be given stronger powers to wield fines, worth potentially millions of pounds, against the biggest firms who persistently choose to pay their suppliers late. The Commissioner will also be able to carry out spot checks and enforce a 30-day invoice verification period to speed up resolutions to disputes.
The upcoming legislation will also introduce maximum payment terms of 60 days, reducing to 45 days, giving firms certainty they will be paid on time.
Audit committees will also be legally required to scrutinise payment practices at board level, placing greater pressure on large firms to show they're treating small suppliers fairly backed by mandatory interest charges for those who pay late.
The Federation of Small Businesses (FSB) Wales has welcomed the plan as a 'positive prospectus for growing an enterprising culture'.
Small and medium-sized firms employ 60% of the UK's workforce and 62% in Wales and generate £2.8 trillion in turnover.
The UK Government said late payments are one of the biggest barriers to small business growth, causing cashflow problems that stop firms from scaling up and investing in their future. Across the UK, late payments cost the economy £11 billion annually and close 38 businesses daily.
It said it would work with the Welsh Government in the development and delivery of final late payments measures to ensure Welsh businesses have the same protections as those in other parts of the UK.
John Hurst, Chair of FSB Wales, said:
'Smaller businesses are pivotal to the opportunity to grow the Welsh economy and create prosperity throughout every part of Wales. That's why it's good to see stated ambition for those businesses within this plan, not only in addressing some of the barriers which impede business growth – such as tackling the problem of late payment – but also by creating a positive prospectus for growing an enterprising culture in Wales.
'For success, this plan requires us to draw on partnerships in Wales and we look forward to continuing to work closely with the Secretary of State for Wales and government colleagues in the implementation of the new strategy.'
Secretary of State for Wales Jo Stevens said:
'Small and medium-sized businesses are at the heart of local communities the length and breadth of Wales. They deserve our support which is why we are taking these major steps to help them succeed.
'Our new plan for small and medium-sized business is a key part of our Plan for Change. It will help create and grow companies right across the UK, creating jobs, driving growth and putting more money in people's pockets.'
The UK Government is also launching £4 billion in financial support aimed at boosting growth and supporting more small businesses to start up and grow. This includes a £1 billion boost for Start Up Loans, increasing the eligibility criteria of 69,000 loans worth on average £15,000 each.
The British Business Bank is also set to receive a new £3 billion boost – raising the total lending capacity to £5 billion – to help lenders offer more small business loans through the ENABLE programme. Under the scheme, the BBB provides a government-backed guarantee to help lenders feel safer when lending to smaller or newer businesses, enabling them to offer better loan terms including with lower interest.
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