Large businesses could be fined for not paying smaller suppliers on time as part of a raft of proposals to tackle a problem that sees thousands of small firms go bust every year, the government said today.
Small business minister Kelly Tolhurst said companies would now be held accountable to their own boards for their payment practices, as they would have to detail them in their annual reports.
Other suggested measures include strengthening the powers of the small business commissioner to tackle late payments through fines and binding payment plans.
Yet the National Federation of Builders (NFB) criticised the government for making proposals rather than taking action.
“These proposals do little to improve the situation of construction companies on the ground,” it said. “The government needs to be bolder and come up with more immediate alternatives to help.”
The Institute of Directors (IoD) welcomed the proposals, saying they marked “a significant step forward”.
“Forcing larger firms to report on their payment practices will ensure much greater scrutiny where standards fall short, and sunlight is often the best disinfectant,” the business body said.
Minister Tolhurst said: “These measures will ensure that small businesses are given the support they need and ensure that they get paid quickly – ending the unacceptable culture of late payment.”