The Government has proposed new measures to tackle the issue of late payments to small businesses by larger companies who abuse their position in the market.
The proposals include measures to empower trade bodies to highlight best and worst practices in payment behaviour in order to deliver practical improvements and forms part of the modern Industrial Strategy which looks to help small businesses to grow and expand.
Currently, nearly a quarter of UK businesses report that late payments are a massive threat to their survival.
Research from the Federation of Small Businesses has revealed that tackling late payments could represent a huge opportunity for economic growth, potentially adding £2.5 billion to the UK economy each year and keeping 50,000 extra businesses open.
The new proposals are looking to build on previous action from the Government of appointing a Small Business Commissioner and measures to improve access to finance.
The other proposed measures include the call for evidence to consider the best way company boards can implement responsible payment practices through their supply chain and promotion of innovative technologies including the latest accounting software that can help smaller firms to manage their payment processes.
Small Business Minister Kelly Tolhurst said: “Our 5.7 million 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 5 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.”
The new call for evidence comes following an announcement by the Business Secretary Greg Clark earlier this week where he announced a number of other measures to support small businesses.
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