Unfair Payment Practices Pushing Small Businesses To the Brink

It pains us that this continues to be an issue but…

this week some big name companies were revealed by a national newspaper as among the worst offenders for paying their bills to small businesses.

They include Cadbury owner Mondelez UK Confectionery, Coca-Cola UK, Budweiser owner AB InBev UK, Formula One Marketing, and consumer goods group Reckitt.

All were revealed as taking more than 110 days to pay their invoices.

The Small Business Commissioner, Liz Barclay was quoted as saying “the payment lengths were “grossly unfair” for small businesses”.

It remains to be seen whether expected changes to the late payment rules will make a difference.

From April 1st the new Prompt Payment Standards will require firms bidding for large government contracts (over £5M) to demonstrate they pay their own invoices within an average of 55 days, tightening to 45 days in April 2025, and to 30 days in the coming years.

In most recent statistics from 2023, a survey found that just over half (55%) of small and medium-sized business managers are waiting on payment for the financial year (2022-23).

It has been estimated that 50,000 businesses shut down annually in the UK due to late payments.

According to the FSB (Federation of Small Businesses) the definition of prompt payment for a small business supplier, contained in the voluntary Prompt Payment Code, is to pay 95% of invoices within 30 days.

Note – the use of the word voluntary!

Perhaps it is time for more hardline compulsory legislation? What do you think?

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