Carl D’Ammassa, group managing director, Business Finance at Aldermore said:
“The damaging impact of late payments to SMEs has been highlighted in recent years, and we welcome the Business, Energy and Industrial Strategy Committee’s move to shine a spotlight on this issue. However, we believe that further action is needed to address this and to ensure SMEs are paid fairly and on time for the work they do.
“We welcome the BEIS Committee’s recommendation of introducing a statutory requirement for companies to pay within 30 days, however to combat the issue further, we have recommended the introduction of a robust reporting system with a significant financial penalty incurred by those who fall below minimum standards. This will make the level of late payments specifically to SMEs clearer and highlight those regular offenders, preventing them from being able to hide these statistics in an average payment metric. The money collected from late payments fines should then be invested back into SMEs through a development fund, potentially overseen by the British Business Bank.
“Despite statistics in the Department of Business Energy and Industrial Strategy’s latest call for evidence showing that late payments practices are declining, it is essential that the government continues to stamp out the UK’s bad late-payment behaviour and support British business.
“Our Future Attitudes* survey has found that over half of all UK small businesses have had a client pay late within the last 12 months, with firms currently being owed, on average, over £34,000 as a result. For many businesses, outstanding payments amounting to this level could well be business critical if not resolved swiftly.”