Late Payments Consultation - an open letter

Open letter to Kemi Badenoch MP, Secretary of State for Business and Trade

Dear Secretary of State,

Small businesses are the life-blood of the UK economy. We provide the jobs, dynamism and growth that will help drive the recovery. We make up the supply chains that enable large businesses to thrive. And we are the shops on the high street that put the heart into local communities.

We need policy makers to take the  late payment crisis seriously. Late payment sweeps aside otherwise successful businesses. It destroys jobs and livelihoods. It cuts the tax intake. And that all adds to costs the state pays out.

It is also unnecessary.  

The UK Government’s current late payment review is an opportunity to address the issue once and for all. 

We are calling on the UK Government to help change the culture and language around late payment, by calling it what it is: unapproved debt. Regulators and businesses should do the same. This is money that small businesses have earned, and which very often big businesses are holding onto without any moral claim on it. 

Xero’s research shows that when thinking of late payments as “unapproved debt”, 81% of large companies would be more likely to pay their suppliers in a timely fashion.

Big firms are treating small suppliers like bankers, but without disclosing it to their investors. If they are going to do that, they should be prepared to be accountable for it.

Businesses should be transparent: large firms should be required to set out prominently in their annual reports how much unapproved debt they are carrying. This should be based on the working assumption that payments should be made in 30 days, regardless of agreed terms which can run to hundreds of days. 

Where firms do not pay within 30 days, they simply need to explain why not. This does not make paying within 30 days compulsory. It’s a case of “comply or explain why”.

As small businesses we are not asking for handouts, or anything we’ve not already earned. We simply believe that businesses should pay their suppliers on time for the work they have done. After all, that’s what we do for the millions of people that between us we employ.
1.Do you consent to sign this open letter on behalf of the UK small business community?