Late payments crackdown set to aid auto sector SMEs

Garages and self-employed workers in the automotive sector are in line to benefit from new government plans to crackdown on the scourge of late payments to small businesses, say ministers.

A new Fair Payment Code, replacing the old Prompt Payment Code, will be open to signatories this autumn — and will be designed to push businesses to pay faster, with “an exemplar gold category” for those paying suppliers within 30 days.

Small business minister Gareth Thomas said the move will pave the way for a boost for small and medium enterprises (SMEs) by speeding up cash flow.

“Small businesses deserve to be paid on time, it’s as simple as that,” he said.

Research by Aftermarket shows that the wholesale and retail trade sector, including vehicle repair workshops, accounted for 14% of all SME employment and 35% of SME turnover in the UK private sector in 2021 — according to most recent data from the Department for Business, Energy & Industrial Strategy.

In the UK, an SME is defined as a business with fewer than 250 employees and a turnover of less than £50,000,000.

The Federation of Small Businesses said its data shows that 52% of SMEs in the UK suffered from late payments every quarter in 2022.

According to Small Business Commissioner, Liz Barclay, there are more than 5,000 signatories to the existing code, under which firms have committed to paying at least 95% of their suppliers within 60 days and 95% of small suppliers within 30 days.