As part of a revision on the powers of the small business commissioner, officials will look into whether the commissioner should have the power to issue fines and fees or compel a company to make a payment, FT reported.
In addition, it will be examined whether the commission should have the power to compel companies to share information during investigations and launch investigations into allegations of misconduct without any complaints coming in beforehand. Other measures being considered include standards for good conduct and board level responsibility, according to FT.
The U.K.'s Federation of Small Businesses (FSB) research shows that around 50,000 small businesses close per year because of late payments, with the total owed last year around 23.4 billion pounds (about $30 billion), FT reported. Those numbers have only gotten worse with the pandemic as larger companies skimp on payments to try and conserve cash. While small- to medium-sized businesses (SMBs) can charge interest on late payments, few want to, fearing losing contracts with bigger firms.
Since launching in 2017, the commissioner has recovered 7.5 million pounds (about $9.7 million) owed to SMBs, naming eight large firms that had paid suppliers late following an investigation, FT reported.
Mike Cherry, national chairman of the FSB, said late payments are "debilitating." "It deprives small firms of cash flow, holds back growth, undermines productivity and forces many to take out external finance," he said, according to FT. "In thousands of cases a year, this causes the closure of small businesses."
In July, PYMNTS reported that 62 percent of SMBs were found to have been subject to late or frozen payments, citing a report from the FSB. The pandemic was said to be the largest factor contributing to the figure.