Government late payment move gets AAT tick

Following the Government's announcement of new measures to tackle late payments that blight small businesses and the self-employed, Jonathan Gorvin, Executive Director of Strategy and Compliance at AAT, has shared his views welcoming the measures. AAT, whose AAT Licensed Accountants and Bookkeeper members collectively serve more than 840,000 small businesses in the UK, has long campaigned for the reform of the Prompt Payment Code to address the issue of late payments. 

Jonathan Gorvin, Executive Director of Strategy and Compliance at AAT, says:

“Whilst these new measures are very welcomed, SMEs are the lifeblood of our economy, and we need to continue to ensure they are appropriately supported with all their accounting needs - whether that's late payments, securing finance or accessing banking services."

“Every quarter, 52% of small firms in the UK suffer from late payments, costing SMEs £22,000 a year on average and contributing to 50,000 business closures annually. It’s a very real problem and devastates the growth and survival of thousands of small businesses. We've been long calling for large businesses to be held accountable for paying their suppliers on time," Gorvin said. 

“The new measures announced by the Government are a stride forward in supporting SMEs tackle the issue of late payments. It's particularly positive to see the upcoming new legislation will require all large businesses to include payment reporting in their annual reports, as well as taking enforcement action against those businesses that engage in a late payment culture and rewarding those businesses who are demonstrating that they meet good payment standards. We hope that the launch of the new Fair Payment Code, in replacing the Prompt Payment Code, will generate the essential change in behaviours required."

Gorvin continues, “but let’s be clear; late payments are just one of many issues facing small businesses that the Government needs to strengthen their stance on. For example, SMEs should not be further burdened by a risk of debanking - a practice that the Commons Treasury Select Committee reported has increased by 44% between 2022/23 and 2023/24."

“We’d also like to see the Treasury helping SMEs access alternative financing platforms to offer more flexibility and quicker release of funds, with one solution being the Federation of Small Businesses’ recommendation to allow more approved lenders into the Bank Referral Scheme," Gorvin concluded.

Gorvin's comments reflect AAT's long advocacy for prompt payment reform to create a responsible payment culture and support SMEs.