ICM says new payment reporting proposals will protect small businesses and their cashflow
New proposals in the Small Business Bill to oblige large companies to publish detailed information about their payment practices and performance will enable small businesses to enter into trade relationships with their ‘eyes wide open’ according to the Institute of Credit Management (ICM), a leading business organisation.
Philip King, Chief Executive of the ICM, says that a new and robust reporting regime will help small businesses identify the best paying large companies, and better manage their cashflow accordingly: “Transparency is a key element in changing culture across many aspects of business, and payment behaviour is no exception,” he says.
“The proposed new measures will allow more visibility of how businesses behave in paying their suppliers. Small businesses need to make better informed decisions before entering into commercial relationships and this measure will be invaluable in helping them enter into such relationships with a clear picture of what they are letting themselves in for.”
In welcoming the news, the Mr King says he would like to see companies obliged to publish their payment record on their websites, and for the information to be linked directly to the website of the Prompt Payment Code which the ICM administers on behalf of the Government. He also says that there should be a mechanism for the reported information to be passed to the Credit Reference Agencies to enhance their reports.
The proposed changes will oblige larger companies to report: the average payment time; the proportion of invoices paid beyond terms; and the proportion of invoices paid within 30 days, over 30 days, over 60 days and over 120 days. Reporting on a quarterly basis will be a mandatory requirement for all large and quoted companies.
Business Minister Matthew Hancock said that tackling late payment is at the heart of the Government’s drive to help small businesses: “We know that small businesses are often reluctant to risk losing business by using the redress measures we’ve put in place, so we want to tackle the underlying culture by increasing transparency on payment practices and performance,” he says.
“The measures we are consulting on will make it clear to small businesses and consumers alike which large businesses behave properly, and those that think they can ride roughshod over their suppliers.”
The consultation follows the announcement last month that a new Prompt Payment Advisory Board has been set up to strengthen the impact of the Prompt Payment Code.