HC Deb 09 June 2004 vol 422 cc413-4W
Brian White

To ask the Secretary of State for Trade and Industry what steps her Department takes to help small UK businesses recover money which is owed to them by large multi-national companies. [176832]

Nigel Griffiths

Where contracts are governed by UK law, businesses may use the Late Payment of Commercial Debts legislation (as amended) to claim interest and compensation on late paid debts.

This Government have always recognised that late payment of debts can have serious effects on the cash flow of smaller companies, which is why we had a manifesto commitment to introduce a Late Payment Act to allow small businesses to: claim interest on late payment from other business or public sector bodies; allow creditors to claim a fixed sum of compensation to cover debt recovery costs should late payment happen.

The Government also established the Better Payment Practice Group whose website lists the payment record of companies.

The package of measures has had a positive effect on payment times. The Grant Thornton European Business Survey showed that the average time taken in the UK to settle accounts in 1997 was 49 days. By 2002 this had fallen to 41 days. By comparison, the average settlement time in our European neighbours was 50 days. A recent survey by the REL Consultancy Group looked at average days payable outstanding (DPO) and concluded that UK companies' payment performance is 33.6 days against 42.4 days for Europe as a whole.

Because of concerns that suppliers would not utilise the legislation for fear of reprisals or boycotts, I have also undertaken as Minister to write, in cases where invoices are not disputed, on be half of small businesses to the managing directors of companies to convey their complaint and seek an explanation and appropriate action. I urge all Members of Parliament to do the same on behalf of constituents.

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