30 March 2009 | Martha McKenzie-Minifie
The Federation of Small Businesses is calling on Companies House to name, shame and fine public companies that do not declare their payment terms.
In its Budget submission today, the FSB claimed that late payment had become standard business practice but it was "wrong and has to end". The FSB says around 50 per cent of public companies do not fully report their terms.
"During the course of an economic downturn, combined with current illiquidity, late payment will lead to business closures and job losses," the FSB wrote in an open letter to Chancellor Alistair Darling.
The business organisation said public companies were obliged to submit payment terms to Companies House but the requirement was not fully enforced.
The FSB proposed a series of measures to help its 215,000-plus members through the recession, including automatic rate relief for small firms, an increase in the thresholds of individuals' National Insurance contributions and the appointment of an independent corporate mediator to work with banks and their business customers.
"The Chancellor is about to announce possibly the most crucial budget in decades and he has got to get it right," FSB national chairman John Wright said in a statement. "The government must take decisive action to inject life into the economy and resolve the big problems faced by small businesses: the double whammy of irregular cash flow and a lack of finance from the banks."
The Budget will be unveiled on 22 April.