Enterprise minister Matt Hancock said that new legislation could be passed “if it’s needed and if that’s what the consultation shows is required”.
“We are open minded and we want to consult very broadly on getting the balance right between legislating around contracts and making sure prompt payment is dealt with.”
Hancock said it’s also important to ensure that the Prompt Payment Code is expanded and better enforced.
John Allan, national chairman of the Federation of Small Businesses, said: “The smallest firms don’t have the same cash-flow buffers as their larger counterparts and being paid on time can be the difference between being able to pay their staff and their own bills.”
The current legal situation allows small businesses to demand interest on and compensation for late payments, but there are concerns that many won’t speak out through fear of damaging their relationships.
Hancock added: “I fully understand why small businesses are reluctant to put their relationship with a big client at risk by naming them as poor payers so a mechanism where they could do this anonymously will be important.”
Hancock also told Real Business that the government will be passing new laws to ensure that all of the government’s big contractors will have to pay their small suppliers within the right period of time.
John Allan added: “We have long said that Government needs to ensure its Tier 1 suppliers pass the quick payment terms they receive down the supply chain so the commitment to pay small firms at the same time as big contractors is significant.”
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