A new report published by the Business, Energy and Industrial Strategy (BEIS) Committee has highlighted how 'bad payment practices' have led to the 'failure' of many small and medium-sized enterprises (SMEs).
The government's Prompt Payment Code, which was created to address poor payment practices, has 'too often' been 'ineffective', according to the Committee.
A 'statutory requirement' for companies to pay within 30 days should be introduced, the Committee stated. It also recommends giving the Small Business Commissioner the power to fine large businesses who pay their suppliers late.
Commenting on the report, Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: 'Eliminating the scourge of late payments would see 50,000 businesses saved each year, [and] add £2.5 billion to GDP, which would be a real boost to UK productivity.
'The government must respond to this report with tough action on late payments, supporting smaller businesses to further develop their leadership and management capability, and to improve the adoption of basic digital technologies that small businesses need to grow and become more productive.'