Small Business Commissioner

Now, a sixty-day maximum addresses the payment timetable before the problem even arises, rather than only offering a remedy after the fact.

Now, the second key thing it looks at is improving and providing enhanced powers for the small business commissioner, whereby the commissioner will gain significant new authority to investigate poor payment practices, adjudicate disputes without the need for court proceedings, and fine persistent late payers.

The government's announcement describes potential penalties worth tens of millions of pounds for the worst offenders.

Now, the Office of the Small Business Commissioner already recovered more money for small firms in the past year than in the previous four years combined.

Then it also seeks to introduce mandatory interest on late payments, meaning all commercial contracts must include a right to statutory interest on late payments set at eight percent above the Bank of England base rate.

This applies automatically- Even if a contract is silent on the matter.

Although many practices will still be reluctant to escalate a dispute for the same reason that has always applied, in that they don't want to jeopardize their commercial relationship with the client.

Now, statutory rights to interest have existed for years, and take-up has been limited precisely because of that relationship dynamic.

If they can.

And the irony is, I mean, there's a lot of legislation going on at the moment around the Small Business Commission and trying to change fines and interests and everything to do with late payments.

But the entire...

The entire infrastructure of that policy is big stick.

And I think we've misunderstood how to get people to do what we want.

It needs to be carrot and stick.

And we're looking at how do we bring in the carrot? The stick is, I'm going to fine you 8% and I'm going to report you to the Small Business Commission.

But the carrot is, I'll give you the good cash flow that you feel like you need.