31st July Journal Column

Web-LogoBy Catriona Lingwood, Chief Executive of Constructing Excellence in the North East

The news that the government plan to appoint a Small Business Commissioner to tackle payment disputes and unfair practices, means that the government have actually followed through on something they promised our industry, which is brilliant news for SMEs.

Back in June I shared my support for the government’s plans to tackle the ever growing problem with late payment, and it seems it’s now becoming a reality.

On Sunday, the government announced the new service which will be the first point of contact for SMEs and will provide advice and support on how to avoid disputes and resolve them. It will also offer access to mediation services to resolve problems quickly, affordably and most importantly out of court. The commissioner role will offer advice to suffering contractors, investigate the many complaints filed and have the power to name and shame offenders.

The plan is only one of several measures the government are taking in the right direction to tackle late payments. Other measures include the requirement of large companies to report payment policies and practices twice a year. They will have to report on their standard payment terms, average time taken to pay, the proportion of invoices paid in 30 days or less, 60 days or less and then 60 days and beyond.

The commissioner will then have permission to use this data to name and shame those who are failing to pay on time. Hopefully the embarrassment of being named will give companies the push they need to cough up!

The data will also be used to celebrate those who are paying promptly, which may sound silly, but celebrating a company that is fulfilling their contractual agreement is such a rare thing to hear at the minute, that it’s something I think we should be making a big deal of!

It may seem like the government are going to extreme measures but for me they’re only doing exactly what is needed. Nothing has been worked in the past, so I’m all for the introduction of new plans, it means there’s more chance of at least one of them sticking and being successful.

According to the Bankers’ Automated Clearing Services (BACS), SMEs spend £10.8billion each year chasing late payments, and as of this month they were collectively owed £26.8billion. These statistics are appalling, payment isn’t optional, these businesses need, and deserve, to be paid on time for their services.

I look forward to seeing how the late payment tsar affects the industry as it has the potential to resolve these issues once and for all.

All firms are invited to respond to the plans before they are passed as part of the governments Enterprise Bill, on the Department for Business Innovation and Skills on the Government website. The consultation will run until 21 August.