Jewellery businesses challenged by late payments from larger firms could wave goodbye to the problem in the future after new measures were introduced last week to tackle the issue across UK industries.
The new proposals include a call for evidence to consider the best way company boards can put in place responsible payment practices throughout their supply chain.
They also suggest promoting technology, such as accounting software, to help small firms manage their payments processes, and empowering trade bodies to highlight the best and worst practices in payment behaviour.
Nearly a quarter of UK businesses report that late payments are a threat to their survival. Research from the Federation of Small Businesses suggests tackling the problem could add £2.5bn to the UK economy and keep an extra 50,000 businesses open each year.
Small Business Minister, Kelly Tolhurst, who launched the call for evidence, said: “Our 5.7m small businesses are the backbone of our economy, and ensuring we remain one of the best places in Europe to start and grow a small business is a key part of our modern Industrial Strategy.
“Over the past five years the amount owed to businesses in late payments has halved, but we will go further to make sure all of our small businesses are treated fairly.
“Today’s new call for evidence will help us identify the most effective way possible to tackle this issue once and for all and ensure small businesses are on a level playing field with their larger counterparts.”
Meanwhile, Federation of Small Businesses (FSB)’s National Chairman, Mike Cherry, said: “Late payment is the biggest challenge affecting small businesses and it is good to see the government getting serious about this issue, especially when it comes to large firms paying their supply chains promptly.
“The voluntary Prompt Payment Code is not working when it allows signatories like Carillion to pay on terms of over 120 days, so we want to see a new tough and transparent compliance regime being proposed.”
Some large businesses are said to use late payments and extended payment terms to exert control over small businesses in their supply chain, and the government will now seek the views of the UK business community on how best to ensure small businesses are given a fair deal.