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Fine big companies which pay suppliers late, says small business tsar

Britain’s biggest companies should face significant fines if they persistently pay suppliers late, the Government’s small business tsar has insisted.
Paul Uppal, the small business commissioner, can name and shame those who do not honour the terms of purchases from smaller companies but wants stronger powers to actively punish miscreants.
“Certainly having ability to fine focuses minds and brings more credibility to the role,” he told MPs on the Business, Energy and Industrial Strategy select committee.
“I’m not saying we can’t change the culture [of late payment] just by having conversations and highlighting issues, but we cannot deny the reality – the ability to fine would bring more gravitas to the role.
Currently he can approach big companies when there has been a complaint over its payment practices, but chief executives do not typically respond quickly.
Fine big companies which pay suppliers late, says small business tsar

Paul Uppal can name and shame big firms, but wants the power to issue fines to force them to pay attention to their suppliers

Credit:
Parliament TV
“They are not always in any rush to put us in on Monday morning at nine o’clock to meet them,” he said.
But the prospect of a fine of a percentage of turnover “would focus minds intently". 
Mr Uppal said the decision to introduce fines for late payments is not his.
“Ultimately that is above my pay grade and it is for my political masters to decide on that,” he said.
There is already a prompt payment code which can be signed by big companies in which they promise to pay suppliers on time, as agreed, without retrospective changes to the terms.
Signatories also pledge to pay suppliers within 60 days.
Yet Mr Uppal pointed out that failed construction giant Carillion was a signatory, yet typically paid suppliers and sub-contractors in 90 days.
Late payments
As it was typically paid by the Government in 30 days, this both gave Carillion a substantial commercial advantage and left its suppliers struggling with cash flow.
As a result when the former FTSE 100 firm collapsed at the start of this year, thousands of sub-contractors were left in the lurch, having already waited for as long as three months to be paid for their work.
The tsar was brought in last year to set up his team and began work at the start of this year, giving small companies a champion to step in when bigger firms failed to pay up. But progress has been slow.
One problem is that small companies will often want to remain anonymous rather than pursuing a complaint against their biggest customer.
So far 48 SMEs have complained to Mr Uppal about 19 bigger companies.
He wants to move to a model used in Australia where small firms’ invoices generally include a statement that if the invoice is not paid on time then the customer will be referred to the small business commissioner.
“It has become general practice. If we can get to that position it would be good,” he said.
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