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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.  Practices range beyond simply paying late; we have seen retrospective discounting (larger firms forcing a discount of an already agreed price), paying-to-stay (smaller companies pay larger firms to remain a supplier, but without the promise of any actual work).  FSB tackled Carillion, 6 months before it collapsed, as we saw they were paying suppliers in 126 days – more than 4 months.

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 each year, whilst the UK economy would receive a £2.5 billion boost.

Action FSB has taken


  • In March 2018, 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.  This has led to a Call To Evidence published in October.
  • The Government has launched its Duty To Report website, where large companies are having to publish their payment terms.  Most will be filling in their returns by Spring 2019.  If you are considering working for someone, check them out on here, first.  
  • In 2017 we launched a new and successful FSB debt recovery service for our members.
  • In Spring 2017 we were invited by the Government to be involved in the recruitment for the Government’s new Small Business Commissioner, who businesses should contact when they face a late payments difficulty
  • In November 2016 we published a major report into poor payment practice and the economic impact on small suppliers.

Our Goal


Our analysis shows that we need to transform boardroom culture in our largest companies.  The Small Business Commissioner has been operational for a year, and he should now use the ‘Name and Shame’ powers he holds to combat the worst actors; however he can only do this with the right information, so members affected should get in touch with him via his website.  FSB and the Commissioner will be analysing the Duty To Report returns to help raise the alarm on the worst performers.  FSB is now campaigning for every large company to have a Non-Executive Director responsible for good supply chain practice – reporting to the Board as head of a sub-committee, reporting to the AGM, and writing in the Annual Report of what the company is doing to help their suppliers.  The Government is listening, and has adopted this model for its own Departments

Achievements in...


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UK/Westminster

    • Parliament passed a Small Business Act which created the Small Business Commissioner, to tackle late payments.  It also created the Duty To Report which is now kicking in for large companies
    • In 2017, many parties around the UK included measures to tackle poor payment practice to small businesses
    • In 2018, both the Chancellor and Prime Minister, in messages to FSB members, agreed to take action to eliminate late payments

Visit UK/Westminster section
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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