More than 1,000 businesses are ignoring regulation by not reporting how long they take to pay suppliers, according to an analysis of government data by the Chartered Institute of Procurement & Supply (CIPS).
Following the public identification of Holland & Barrett by the Small Business Commissioner as a serial late payer, the analysis also shows that late payment is further widespread. According to CIPS, on average large businesses pay almost a third (31%) of their invoices late with 15% taking longer than 60 days.
Malcom Harrison, group chief executive officer at CIPS, said: “SMEs play a vital, creative role in supporting our economy. Late and delayed payments can have a devasting impact on small businesses, causing thousands to go out of business every year.
“The current prompt payment data is lying unseen and unused. The government must ensure these latest requirements are policed and published so that serial late payers are held to account.
The analysis by CIPS also found that the Prompt Payment Code (PPC), which businesses can sign up to voluntarily, is having a limited impact on the payment performance of large businesses. Any business that signs up to the PPC is required to pay suppliers within 60 days and work towards 30 days as the norm.
The data reveals that businesses signed up to the code pay 12% of their invoices later than 60 days on average, only slightly better than businesses who are not signed up to the code (15%).
Harrison said : “The failure of the Prompt Payment Code highlights the need for more punitive measures to stop the unprofessional and unethical practice of late payment.
“Businesses who sign up to the Prompt Payment Code but fail to meet the criteria should be removed from the Code until their payment practices are of the necessary standard.”
According to SME finance provider Funding Options the Small Business Commissioner has recovered £3.4m of late payments for 91 small businesses, £3.1m of this in the last six months.