Creating a Responsible Payment Culture: A Call for Evidence in Tackling Late Payment

Overview

The Government is building an environment in which small and medium-sized businesses can continue to prosper, tackling the continuing issue of late payments is vital for this to happen. Businesses with good credit and cash flow management build a positive relationship with their creditors and free up cash to invest in growth and innovation. We are also interested in business views on the length of payment terms.

In recent years the Government has taken steps to tackle the problem of late payment, introducing measures such as the Small Business Commissioner to deal with small businesses’ late payment disputes and providing small businesses with better information on businesses they intend to trade with through the Payment Practices Reporting Regulations. As of 2017, the amount owed to smaller businesses in late payments more than halved from the previous five years but we understand the need to go further to tackle unfair payment practices.

The level of late payment debt owed to small and medium-sized businesses remains far too high and many small firms still have no choice but to trade on terms which are too long, imposed on them by larger customers. 

The Government is ensuring we have the right support in place for small businesses – creating a responsible payment culture is key. We are keen to hear views from businesses of all sizes and in all sectors, right across industry. This call for evidence considers the following:

1. Creating a responsible payment culture – the problem under consideration: This analytical chapter sets out a brief summary of evidence to support stakeholders in responding to the questions posed in this call for evidence. It covers the background to the issues and the evidence on current payment practices such as timings, differences by sectors and firm sizes, trends, causes and impacts.

2. Existing payment practices and experiences: This section seeks evidence on existing payment practices and experiences from both suppliers and buyers. We invite businesses to submit evidence on late payment, their typical payment terms and how these have changed over recent years.

3. Existing measures to improve payment practices: This section gathers views on existing measures to create a responsible payment culture and what more can be done to further refine measures and promote good practice. It also seeks views on experiences from other countries which have measures in place to improve payment practices.

4. New measures to improve payment practices: This section seeks views on new measures to encourage a responsible payment culture. It seeks opinions on how Government can go further to empower small business, including options for technology to enhance the payments process.