The government has launched the Fair Payment Code to tackle late payments, to reward good practices and ensure small businesses are paid on time.
The new Fair Payment Code aims to address the widespread problems with late payments to small businesses, as research finds that small firms are owed, on average, £22,000 a year.
The code, overseen by the Small Business Commissioner Liz Barclay, introduces a gold, silver and bronze system to reward best payment practices and to help smaller firms identify reliable and trusted partners. Businesses can now sign up to the code on the Small Business Commissioner website.
Prompt payment awards
- The gold award is for firms paying at least 95% of all invoices within 30 days.
- The silver award is for those paying at least 95% of all invoices within 60 days, including at least 95% of invoices to small businesses within 30 days.
- The bronze award is for those paying at least 95% of all invoices within 60 days.
Small businesses play an essential role in delivering growth - 99.8% of businesses in the UK are small businesses and they employ over 60% of the British workforce. Late payments and lengthy payment terms can lead to financial strain and even business failure.
"The Fair Payment Code is our response to all those suppliers who begged for a more aspirational, robust and ambitious approach to changing the business-to-business payment culture in the UK. It also gives a clear signal of intent on the part of government. We want suppliers paid within 30 days with payment beyond the due date a rare event. We want longer contractual payment terms to be recognised as potentially detrimental to vital supply chains. We want businesses of all sizes to commit to fair and quick payments and to avoid harmful disputes. This new Code will drive a better payments culture and benefit everyone." Liz Barclay, small business commissioner.
Freelancer body IPSE has welcomed the new initiative but IPSE's Fred Hicks said that "it's fair to say that the Code can't fix the problem of late and long payments by itself." IPSE is calling on the government to do more to crack down on unfair contracts.
New support for disabled entrepreneurs
The government has also unveiled an initiative to support disabled entrepreneurs to access the finance required to start their own firms, with the support of UK banks including Barclays, HSBC UK, Lloyds Banking Group and NatWest. Research from the Lilac review has found that if opportunities were improved for disabled founders, it could unlock an additional £230 billion for the UK economy in growth and jobs.
The Disability Finance Code for Entrepreneurship aims to boost access to finance for disabled entrepreneurs and encourage greater engagement between the financial services sector and the disabled entrepreneur community.
"When disabled entrepreneurs are given equal access to finance, society gains in ways that go far beyond individual success. Inclusive entrepreneurship drives innovation, creates diverse workplaces and encourages economic growth that benefits everyone. The Disability Finance Code paves the way for a fairer financial system that doesn't leave talent untapped. By supporting disabled entrepreneurs, we're investing in a more inclusive future, where everyone has the opportunity to contribute, strengthening our economy and society as a whole." Joseph Williams, ceo and co-founder of small business Clu.
Written by Rachel Miller.
