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ECA influences Government decision on five day SME payment

ECA influences Government decision on five day SME payment

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ECA has persistently asked Government to use its position as a major buyer to help fix the problem of late payments to SMEs.

ECA has successfully presented this message to the Cabinet Office and Crown Commercial Services, through ongoing dialogue with the Department for Business, Energy and Industrial Strategy (BEIS) and in its formal consultation responses.

Earlier this month, Small Business Minister Kelly Tolhurst MP, launched a call for evidence on the issue of late payment. Oliver Dowden, Cabinet Office Minister for Implementation, said, "we expect the highest payment standards from both government and big business... That is why we will commit to central government aiming to pay 90 per cent of undisputed invoices from small and medium sized businesses within five days. Small firms can also report poor payment practices via our ‘Mystery Shopper’ service, which ensures their voice is heard... We are listening to businesses and doing more than ever to level the playing field for small businesses to win work in the public sector."

Added to the target of 33.3 per cent of public sector spend required to be with SMEs, and meaningful evidence of poor payment being reported on the BEIS Government website, it seems the net is beginning to close around those who rely on suppliers’ cash to ensure the liquidity of their own business.

The Government also announced that it wants to see the promotion of technology, such as the latest accounting software, to help companies manage their payment processes and enable trade bodies to highlight the best and worst practices in payment behaviour. ECA has been instrumental in establishing the blueprint for what good payment technology looks like in construction and engineering, as well as expounding the benefits of digital transformation in this area.

Tolhurst said: “Today’s new call for evidence will help us identify the most effective way possible to tackle this issue once and for all, and ensure small businesses are on a level playing field with their larger counterparts.”

In addition, Business Secretary Greg Clark earlier this week also set out other new measures to strengthen the (hitherto remarkably weak) Prompt Payment Code and afford the Small Business Commissioner greater opportunities to lead, influence and integrate the late payment initiatives – a request ECA has made of Government for some time.

Small Business Commissioner Paul Uppal is joining the Prompt Payment Code’s Compliance Board and he is likely to identify further opportunities for meaningful reform in this area. Uppal said: “I am looking forward to working with the Prompt Payment Code Administration Team and improving current processes to ensure timely payments, which will encourage growth and productivity for SMEs across the UK”.

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