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The thinking is that small companies are reluctant to go head-to-head with the big companies that employ them, for fearing of losing business, but their representative organisations feel freer to enagage in battle.
Business minister Matthew Hancock said: “Small businesses are the economic backbone of the UK, but some large companies are squeezing the life out of them by imposing unreasonable payment terms. This behaviour must stop, once and for all.”
He added: “Greater transparency is key and we are setting an example in government, by committing to paying 80% of our invoices within five days, with a maximum of 30-day terms on all public sector contracts.”
Business secretary Vince Cable said: “Large companies using their economic might to impose unreasonable terms on their suppliers causes real problems for small businesses. It is a significant issue and there is agreement that we need to keep the pressure up to bring about real change. This is about making the UK a fairer and more trusted place to do business.”
The consultation paper, Late payment: challenging 'grossly unfair' terms and practices, is available at gov.uk (link opens in new window).
Consultation closes on 9th March 2015.
Giving representative bodies powers to challenge unfair payment terms and practices is the latest of a series of measures that the government is planning to tackle late payment. It is also planning to bring in new laws to increase transparency on the payment practices of large and listed companies and help change corporate payment culture.
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