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Late-payment

Late Payment

The Issue

Small businesses are owed on average £6,142 mostly by larger firms not paying them for goods and services on time. For more than 10 years we’ve been highlighting the impact of late payment, supply-chain bullying (suppliers are forced by larger firms to cut their prices), retrospective discounting (larger firms forcing a discount of an already agreed price) and paying-to-stay (smaller companies pay larger firms to remain a supplier).

Our research shows 37% small businesses have run into cash flow difficulties, 30% have been forced to use an overdraft and 20% cite a slowdown in profit growth. If all payments were made on time 50,000 more businesses could be kept open whilst the UK economy would receive a £2.5 billion boost.

Action FSB has taken

  • In 2017 we launched a new and successful FSB debt recovery service for our members.
  • In the Spring 2018 Budget, FSB won a commitment from the Chancellor of the Exchequer that Government will tackle the scourge of late payments to small businesses in the UK.
  • In January 2017 we published a new guide for small businesses facing problems around late payment and managing cash flow.
  • In Spring 2017 we were invited by the Government to be involved in the appointment process for the new Small Business Commissioner.
  • In November 2016 we published a report   into poor payment practice and the economic impact on small suppliers.

Our Goal

FSB is urging government to put their full weight behind eradicating the scourge of late payments. One of the key means of achieving this is by giving the Small Business Commissioner the tools and powers to drive a cultural change. The commissioner is keen to have the ability to name and shame and fine those that employ poor payment practices and FSB believes that this is key to the success of the office’s objective.

The commissioner also needs the ability to properly identify poor payment practices. Giving the office the resources to carry out secret supplier projects and supplier interviews is vital.

Achievements in...


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UK/Westminster

  • A new Enterprise Bill was announced in the 2015 Queen’s Speech. It includes plans for a Small Business Conciliation Service to address the issue of late payment.
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Scotland

  • In 2015 the Scottish Government launched the ‘Business Pledge’, a voluntary scheme to encourage businesses to adopt good practice.

  • We pressured the government to include a pledge on prompt payment to help get Scottish small businesses paid on time by their big customers.

Visit Scotland section

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