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Posted: Tue 3rd Dec 2024
The government has announced several new measures aimed at supporting small business owners, including a new code designed to tackle the ongoing issue of late payment.
The Fair Payment Code, a voluntary scheme for large businesses to commit to paying suppliers on time, replaces the Prompt Payment Code, which launched in 2008.
The redesigned code, overseen by Small Business Commissioner (SBC) Liz Barclay, introduces three tiers to recognise best payment practices and help smaller firms identify reliable partners. The tiers are:
Gold award: Firms paying at least 95% of all invoices within 30 days.
Silver award: Firms paying at least 95% of all invoices within 60 days, including at least 95% of invoices to small business suppliers within 30 days.
Bronze award: Firms paying at least 95% of all invoices within 60 days.
The awards last for two years, before the business has to re-apply. SBC said there is "a robust complaint system" to highlight businesses that are not meeting the requirements of their award category.
Small business minister Gareth Thomas said:
"Late payments cost businesses tens of thousands of pounds and is one of the biggest reasons businesses collapse and today's measures look to tackle the issue head on.
"This government's primary ambition is clear: to go for growth. To do that, we must unleash the potential of our entrepreneurs."
Liz Barclay said:
"The Fair Payment Code is our response to all those suppliers who begged for a more aspirational, robust and ambitious approach to changing the business to business payment culture in the UK. It also gives a clear signal of intent on the part of government.
"We want suppliers paid within 30 days with payment beyond the due date a rare event. We want longer contractual payment term to be recognised as potentially detrimental to vital supply chains.
"We want businesses of all sizes to commit to fair and quick payments and to avoid harmful disputes. This new Code will drive a better payments culture and benefit everyone."
Emma Jones, founder of Enterprise Nation, said:
"Enterprise Nation's research found around half (51%) of small firms say they are either often or sometimes paid late, placing an enormous strain on their cash flow and impacting their own ability to operate and pay suppliers.
"Enterprise Nation has long called for the government to make it easier for the Small Business Commissioner to hold late-payers to account, so it's great to see some progress made with the Fair Payment Code today.
"Ultimately, reducing the time spent by small businesses chasing payments will free up more time for them to focus on the activities they need to grow."
Enterprise Nation has long campaigned on the issue and called for measures to tackle late payment, including contributing to a review by the previous Conserative government, and making suggestions in our manifesto for the Labour government.
In the Autumn Budget, the government said that from 1 October 2025, companies bidding for government contracts over £5m per annum will be excluded from the procurement process if they do not pay their own suppliers within an average of 45 days.
Ministers have also said they will introduce new legislation that requires all large businesses to include payment practices in their annual reports.
Another measure is a new shared initiative with high street banks Barclays, HSBC UK, Lloyds Banking Group and NatWest supporting disabled entrepreneurs to access start-up finance through the Disability Finance Code for Entrepreneurship.
Research from the Lilac Review found that if opportunities were improved for disabled founders, it could unlock an additional £230 billion for the UK economy in growth and jobs.
The banks have committed to improve access to finance products, improved mentoring, showcase more disabled success stories and to actively support disabled representation in their firms.
David Raw, managing director of commercial finance at UK Finance, said:
"The banking and finance industry understands the importance of supporting entrepreneurs with disabilities and improving access to finance for all.
"Many lenders already have commitments and activities in place to support customers with disabilities and will continue to develop and enhance these to support customer needs."
Joseph Williams, CEO and co-founder of small business Clu, said:
"When disabled entrepreneurs are given equal access to finance, society gains in ways that go far beyond individual success. Inclusive entrepreneurship drives innovation, creates diverse workplaces, and encourages economic growth that benefits everyone.
"The Disability Finance Code paves the way for a fairer financial system that doesn't leave talent untapped. By supporting disabled entrepreneurs, we're investing in a more inclusive future, where everyone has the opportunity to contribute, strengthening our economy and society as a whole."
To boost access to funding for female entrepreneurs, the government has also announced a new partnership between Female Founder Finance and UK Export Finance, which will offer no cost services to improve access to finance and helping them grow their networks.
The announcement follows the news last week by the Invest in Women Taskforce that Barclays, M&G, British Business Bank and Aviva have pledged to invest a total of £255m in women-led businesses.
