Small Businesses: Late Payments

Debate between Lord Prior of Brampton and Earl Attlee

Monday 11th September 2017 Lords Chamber

[Lord Prior of Brampton]

My Lords, of course I understand that late payment is very serious for many small businesses and cash is very important to them, but we have made very significant progress in this area. In central government, for example, 95% of all commercial debt is settled within seven days and 99% is settled within 30 days. It is true that in some parts of the economy—in construction, for example—payment terms are later. We believe that by bringing forward the Small Business Commissioner and bringing greater transparency to this area, it will get better.

[Earl Attlee (Con)]

My Lords, is not this a totally flawed economic system, where large businesses are financed by small businesses, although it is large businesses that can easily raise the finance? What are the disadvantages, if any, of moving to a system where all goods and services are paid for by the end of the month following the month of invoice?

[Lord Prior of Brampton]

Industries are very different from each other—the construction industry is very different from the retail business, for example. Waitrose has a scheme whereby it pays small businesses selling goods worth less than £100,000 a year to Waitrose within seven days. Rolls-Royce has a scheme with a time that is longer than that, and Marks & Spencer has a scheme giving special terms for smaller businesses. Some flexibility in this area is not unwarranted.