Partner Article

Government urged to practice prompt payment

A business lobby group has written to the government demanding that they set a better example by paying its suppliers on time.

In a letter to secretary of state for communities and local government Hazel Blears, the Forum for Private Business (FPB) said 95% of businesses believe the government should make sure it a priority to pay their suppliers promptly.

Matt Goodman, the FPB’s policy representative, said: “The Department for Business, Enterprise and Regulatory Reform has acknowledged the impact of late payment on small firms, and is working to ensure the government takes the lead on the issue.”

The organisation said the economic downturn has made late payment a vital issue to small businesses.

A survey by the UK 200 Group and Bacs Payment Schemes earlier this year revealed almost 60% of businesses are being adversely affected by the downturn, with almost a third saying it is making the problem of late payment even worse.

While businesses have a right to charge interest on the debt they are owed under the Late Payment of Commercial Debts (Interest) Act 1998, the FPB said many avoid doing so ’because they fear larger business will refuse to deal with them again.

Mr Goodman said: “Solutions that have been suggested include a public sector code of practice and increased awareness across individual government departments. “The way forward must not lead to more regulation, which would simply add to another major problem for small firms. What is needed is a change in the culture of payment.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .