Companies that consistently delay payments to their suppliers will now be subject to fines potentially reaching millions of pounds, as announced by the Prime Minister. Sir Keir Starmer emphasized the need for timely payments, prompting the government to introduce measures empowering the Small Business Commissioner to penalize large corporations that habitually pay suppliers late.
The new legislation mandates that businesses settle invoices from suppliers within 30 days of receipt, unless specified otherwise, with additional checks in place to detect any violations. Furthermore, the maximum payment terms will be set at 60 days initially, gradually reducing to 45 days, ensuring prompt payments and avoiding disruptions in the UK economy, where late payments reportedly cost £11 billion annually and force the closure of 38 businesses daily.
The implementation of this law is expected to streamline operations for small and medium enterprises, enabling them to concentrate on expanding their revenue streams. Sir Keir Starmer expressed concern over the burden placed on builders, electricians, freelance designers, and manufacturers who spend valuable time chasing payments instead of focusing on business growth. He stressed the importance of rectifying this situation through the Small Business Plan, which aims to eradicate late payments and provide the necessary support for small business owners to prosper and drive economic growth nationwide under the Plan for Change initiative.
In addition to the crackdown on late payments, the government is rolling out a comprehensive financial support package, injecting £4 billion into small business startups and expansion efforts. This includes earmarking £1 billion for new enterprises, offering 69,000 startup loans, and mentorship programs to foster business growth and development.
The Conservative Party welcomed the late payment sanctions but raised concerns about the closure of «218,000 businesses under Labour’s administration.» Andrew Griffith, the Tory shadow business secretary, criticized Labour’s policies for doubling business rates, imposing a £25 billion jobs tax, and imposing strict employment regulations that hinder business operations. The Conservatives pledged to champion the interests of businesses across the UK, supporting job creation and wealth generation.
Chancellor Rachel Reeves has spearheaded various economic initiatives, including raising employers’ national insurance contributions, boosting the minimum wage, and lowering the threshold for employers’ national insurance payments. However, the Resolution Foundation highlighted that these initiatives disproportionately affect low-paid and part-time workers.
To learn more about the impact of late payments and other economic policies, read the related articles:
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– Streeting rules out pay rises for striking doctors
For visual insights into the value of ‘de minimis’ imports into Britain, watch the video below:
– The value of ‘de minimis’ imports into Britain
Overall, the government’s efforts to address late payments and support small businesses are crucial for fostering economic growth and stability in the UK.
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