Better late than never...search begins for tsar

THE Government has launched a search for the UK’s first small business commissioner to crack down on late-paying big firms.

The post has been long-awaited by small business groups, having been announced by the Government in 2015. The role was formally created as part of the Enterprise Act last May, but the job advert, on the Cabinet Office website today, is the first real sign of it becoming a reality.

Late payment is responsible for the collapse of up to 50,000 businesses a year, according to the Federation of Small Businesses.

At the time of the Act, then Small Business Minister Anna Soubry said the ‘no nonsense’ commissioner would communicate with chief executives of big firms directly to help solve the late-payment problem.

FSB chairman Mike Cherry was among business leaders to repeatedly call for a timetable so that companies would be clear on when someone would be in the post. He has also demanded ‘clarity around formalising the commissioner’s relationship with the Prompt Payment Code and the powers the office has to publicly name and shame those companies that don’t comply’.

The Prompt Payment Code sets standards for payment practices and best practice, and is administered by the Chartered Institute of Credit Management. More than 1,800 firms are signed up to the code, with each one committing to the fair and equal treatment of suppliers. They agree to maximum payment terms of 60 days, but should aim to pay within 30 days.

If payment terms stretch beyond 60 days, companies must show that ‘exceptional circumstances’ apply. These will be considered on a caseby-case basis, but could include commitments made to pay smaller suppliers faster than larger ones.

Signatories include BAE Systems, Carillion, G4S, Microsoft, BT and Vodafone, and 30 of the Government’s 33 strategic suppliers have signed up. But FSB research suggests small firms have little confidence in it.

Cherry said: ‘In order to do this effectively, the Government should ensure the commissioner has sufficient resources to tackle the £26.8billion owed to smaller businesses across the UK.’

A new ‘duty to report’, where big firms will have to detail how they pay smaller suppliers, was due to take effect last April, but was delayed. At the end of last month, the Government finally published the new reporting guidance for large firms as Small Business Minister Margot James announced the regulations in Parliament. From April, large firms and limited liability partnerships will have to publish details of their payment practices twice a year, including the average time it takes to pay suppliers, or face criminal proceedings and fines.

The Business Department said this would ‘shine a light’ on poor payment practices and enable suppliers to make informed decisions about who they do business with.

Of the search for the commissioner starting this weekend, the Business Department said it was looking for a candidate who had ‘credibility with both small and large businesses, can advise parties in resolving disputes, and has an appetite to become a national spokesperson for small businesses affected by payment issues’.

The appointment decision will be made by the Business Secretary, supported by a panel that will include Cherry. He said: ‘I am delighted to be invited to be part of the selection process. There is simply no excuse for a business culture where supply chain bullying or poor payment practice are acceptable.’

James said: ‘An unfair payment culture that hurts small and medium firms has no place in an economy that works for all. This is why we are looking for an exceptional individual to help smaller firms resolve payment disputes and champion a culture change.’ The search will run until March 13.