The Federation of Small Businesses (FSB) has called for an independent inquiry into the UK's poor payment culture.
Leading businesses from the FTSE 350 and small companies came together with government and the Confederation of British Industry (CBI) to discuss the UK’s deteriorating payment culture.
The round table, hosted by the minister for business and enterprise Matthew Hancock, acknowledged the progress made in bringing issues around supply chains to light, and sought consensus on how to tackle the issue.
The FSB acknowledged efforts from government to improve payment culture, but has called for an independent inquiry to get clear actions and the progress needed to tackle late payment and supply chain bullying.
The FSB has been working to raise the profile of many of these practices including flat fees, dubbed ‘pay to stay’, excessively long payment terms exceeding payment agreements, discounts for prompt payment and retrospective discounting.
FSB national chairman John Allan says that late payment and the UK’s poor payment culture are difficult issues to address, and that the situation is continuing to deteriorate.
'Following today's encouraging meeting, which brought together a wide range of views and stakeholders, the FSB is calling for a wide-ranging inquiry to address late payment and supply chain bullying in one place.
'It must be independently led and produce clear recommendations in time for the next government to act on early in the next Parliament. We have already fed back to government on this issue in numerous consultations but without any significant progress yet in tackling the underlying causes of our poor payment culture.'
Allan adds that the abuse of small firms in their dealings with bigger businesses can’t continue. 'We have seen the UK’s payment culture significantly deteriorate in the past five years. The gradual creep of payment terms from 30 days to well over 100 days in some cases, coupled with debilitating contract terms, can have a disastrous effect on a small firm’s ability to operate.
'For payment culture to improve, we need fresh thinking and bold steps to be taken.'
Further reading on late payment
See also: Getting paid by credit and debit card