Small business commissioner to address late payment disputes

The department of Business Innovation & Skills (BIS) has announced that it is creating a new role for a small business csar tasked with tackling “unfair” business practices, such as late payment of bills to small firms.

Following the announcement, Small Business Minister Anna Soubry dubbed late payment disputes as “simply unacceptable, saying that small businesses in the UK are owed a whopping £26bn in late payments every year, while chasing the debts costs them millions more.

According to recent research, the average delay in receiving payments faced by small businesses has risen to 72 days, which is a day longer than a year ago and 11 days longer than at the peak of the recession.

As a spokesman for the organisation that commissioned the research said, despite the economic recovery gathering pace, payment delays are getting worse, not better, for small businesses. This is critical, as delays to payments put enormous pressure on small firms’ cash flow and smaller businesses are particularly vulnerable.

Business groups welcomed the news of a csar, with the Federation of Small Businesses (FSB) saying that the appointment is a step in the right direction but adding that the role must be properly funded and be high profile.

A spokesman for the FSB said it is important to ensure that the new commissioner has the confidence of the entire business community, a clear focus on tackling supply chain bullying, and sufficient powers to intervene and resolve late-payment disputes in a timely and effective way.

Meanwhile, the Institute of Directors (IoD) called the announcement “very welcome”, with a spokesman agreeing that late payment is a “particular problem for smaller companies”. He added that it affected around two-thirds of IoD members last year alone.

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