Red light warnings to flag late payers
Small business commissioner Paul Uppal will this week unveil plans that will see large firms that fail to pay their suppliers on time named and shamed. The traffic light warning system will use data on payment practices to highlight repeated late payers, giving them a red light to flag the issue to suppliers, with red lights also set to be handed to firms failing to report their payment terms.
Lloyds Banking Group analysis of companies that reported their payment practices shows that 65% take more than 30 days to settle invoices, while 21% take more than 50 days. The Federation of Small Businesses estimates that large firms failing to settle their bills leads to the collapse of around 50,000 businesses a year. Emma Jones, founder of start-up network Enterprise Nation, comments on the proposals saying: “As a further step, we’d like to see the Prompt Payment Code reduced to 30 days, and signing up to the code be ing a kitemark for large corporates.”