The new Fair Payment Code aims to address the problems with late payments, with research showing that SMEs are on average owed £22,000 per year. The code, overseen by the small business commissioner Liz Barclay, introduces a gold, silver, and bronze system to reward best payment practices and help smaller firms identify reliable and trusted partners.
Ministers said the scheme will boost cash flow for small businesses by tackling late payments and lengthy payment terms that can lead to financial strain and failure.
Liz Barclay, small business commissioner said: “The Fair Payment Code is our response to all those suppliers who begged for a more aspirational, robust and ambitious approach to changing the business to business payment culture in the UK. It also gives a clear signal of intent on the part of Government.
“We want suppliers paid within 30 days with payment beyond the due date [to be] a rare event. We want longer contractual payment terms to be recognised as potentially detrimental to vital supply chains. We want businesses of all sizes to commit to fair and quick payments and to avoid harmful disputes. This new code will drive a better payments culture and benefit everyone.”
Another measure announced today is a new scheme backed by the biggest UK banks to help more disabled entrepreneurs get access to finance and support to start their own business.
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Both of the announcements are aimed at providing targeted support to small firms and entrepreneurs across the UK.
The package, announced in the run-up to Small Business Saturday this weekend, includes a shared initiative with leading banks – such as Barclays, HSBC UK, Lloyds Banking Group and NatWest – to support disabled entrepreneurs to access the finance required to start their own firms.
The participating banks have all signed up to this new scheme committing to improve access to finance products, improve mentoring for entrepreneurs, showcase more disabled success stories and actively support disabled representation in their firms.
