Posted: Wed 25th Jun 2014
In the week global confectionary giant Mars announced it was doubling its payment terms to UK suppliers, the Government is introducing a piece of legislation that seeks to name and shame firms with extended payment policies.
The Small Business, Enterprise and Employment Bill, first announced in the Queen's speech and aired for the first time in Parliament today, contains 142 measures aimed at helping small businesses to grow.
One of these measures will make it law for big corporates to publicly announce their payment terms to small firms.
Small businesses are disproportionately affected by super-long payment periods. Many of the smallest firms rely on cash flow to fund their enterprise rather than take on board expensive loans , so asking a small firm to fund and supply a product they will be paid for four months later can be a make or break scenario.
Business Minister Matthew Hancock told the Financial Times today: "This is part of a package that feeds into the long-term economic plan. In these areas there is no silver bullet just the constant work of making the environment better for small businesses."
Mars, which makes popular treats including M&Ms, the iconic Mars Bar and Bounty, announced it was changing its payment terms from 60 days to 120 on Monday. For firms seeking earlier payment from the confectioner, it has introduced a supply chain finance (SCF) package, which will pay a reduced sum within ten days.
Other highlights of the bill include the scrapping of the exclusivity clause applied to zero-hour contracts, something that will protect the most vulnerable in the self-employment spectrum.
The legislation will also see new measures to finally get public sector procurement from small firms off the ground. The detail includes the creation of a Cabinet Office-based mystery shopper who will challenge procurement authorities on their effectiveness. Payment bureaucracy will also be improved, with the 'you're not a supplier on the system' line becoming a thing of the past.
See how we summarised the bill earlier this month here. The bill is set to become legislation next year.