Large companies that fail to pay their small business suppliers promptly will be named and shamed online by the government, a cabinet office minister says.
Francis Maude urges small businesses to act as whistleblowers with examples of instances where payment times are slipping, with results to be published on the Cabinet Office website.
Maude says, ‘Prompt payment is crucial to smaller companies. The government has an excellent record on paying our bills quickly and we expect our suppliers to do the same and pay sub-contractors well within the 30-day limit. When work has been done, especially by an SME, it is just inexcusable not to pay up quickly for that service.
‘We will be keeping a close eye on how the big suppliers choose to pay their sub-contractors and we won’t shy away from naming and shaming those that we find have failed to pay promptly.’
The Crown Representatives team, which coordinates the government’s approach to the management of key suppliers across all departments, will strongly encourage prime contractors to pay more quickly than 30 days.
Peter Ewen, chairman of the International Factors Group says, ‘The Cabinet Office’s plans to ‘name and shame’ late payers is a welcome step in the right direction. Our recent research among UK accountants found that many SMEs are buckling under financial pressure caused by rising supplier costs and late payment from large, corporate customers.’
Ewen adds that SMEs have huge potential to be the real engine of growth the economy needs, but squeezed margins and a lack of cashflow mean that 71 per cent of accountants say their clients have halted growth plans.
‘These businesses need to be paid on time to help them overcome working capital difficulties before they can actively pursue growth and add momentum to the wider economic recovery.’
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