previous post on late payment practices and access to finance,
I outlined how section 3 of the Small Business Enterprise and
Employment Act 2015 (SBEEA) has placed a duty on large companies
and LLPs to report on their payment practices.
The intent of this legislation is to give a helping hand to
suppliers (who are often small businesses) to successfully retrieve
payment from large companies and LLPs.
Recently there have been further developments around this
legislation and one of these is the proposal from the department
for Business, Energy and Industrial strategy (BEIS) to implement a
complaints scheme. It is proposed that the scheme will enable small
businesses to make complaints where there are payment issues. The
definition of "payment" not only covers failure to make
payments but also price quibbling and attempts to stop small
businesses from making complaints.
The scheme will handle complaints in-house and will be enforced
by the Small Business Commissioner. BEIS have announced that the
appointment of the Commissioner will be in autumn 2017.
The Commissioner's main role will be to provide general
advice to small businesses (for example, dispute resolution) and
point them in the right direction if they need an ombudsmen or
regulator. When a small business makes a complaint, the
Commissioner will ask for representations from the large business
or LLP. The Commissioner will then have to decide whether to make
recommendations to the parties.
However, there are limits to the scheme and these are where
Disputes about pricing of good and
Ongoing legal proceedings
Issues that should be passed to the
appropriate ombudsmen or regulator
Matters that started before the
implementation of the scheme
Section 3 of SBEEA is still scheduled to come into effect in
April 2017 and we have more information following the recent report
The payment practice reporting will:
Apply to large companies and
LLP's only (the criteria have not changed and are mentioned
Be published on a government
Be published twice a year rather than
the quarterly as was originally proposed
Previously, I questioned whether the naming and shaming approach
would break the culture of late payment to suppliers. On
reflection, with the appointment of the Commissioner on the horizon
I do think more weight has been given to the how seriously the
government views late payment to small businesses.
Mike Cherry, National Chairman of the Federation of Small
"Tackling late payments is now a key part of the
government's corporate governance agenda. The comprehensive and
regular duty to report is the first step to combat a business
culture that feels like one where it is OK to pay small firms late.
It is not OK - we estimate that 50,000 business deaths could be
avoided every year, if only payments were made promptly –
adding Ł2.5 billion to the UK economy. We need to see
executive board level engagement and scrutiny of payment practices
to deliver lasting cultural change".
However, I still stand by my question as any decision of the
Commissioner is not legally binding. Also, the Commissioner is not
obliged to publish a report and has discretion as to whether to
include the name of the respondent.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The recent case of Dickinson v NAL Realisations (Staffordshire) Ltd is a "101" guide to how not to run a small business, providing insight into the pitfalls that can await any director or shareholder...
As the Brexit negotiations start, one direct impact is an interest from clients and advisers looking to have flexibility in their organisational structure ahead of any legislative or other changes being implemented.
An assignment of rights under a contract is normally restricted to the benefit of the contract. Where a party wishes to transfer both the benefit and burden of the contract this generally needs to be done by way of a novation.
Any UK companies doing business with the rest of the EU, or even just in the UK but relying on customers and suppliers who deal with the rest of the EU, should be keeping an eye out for the ramifications of Brexit.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).