ECA’s voice heard on SME payment review

ECA has welcomed the government’s new review of payment practices for SMEs.

Announced by Business Minister Grant Shapps on 3 December, the payment and cash flow review will scrutinise existing payment practices and the measures in place to make sure small firms are not let down by their larger clients.

The UK has 5.5 million small businesses, which are an integral part of the economy. At time of writing, over £23.4 billion is owed in outstanding invoices to UK businesses.

ECA Director of Legal and Business Rob Driscoll says, “We applaud the government’s reassurances and commitment to fairer payment practices for small businesses. The issue of late payment still looms large in the engineering services sector and continues to severely impact our members’ cashflows, not to mention the devastating impact this can have on their mental health.

“We also welcome the concept of the Procurement Review Unit to build on the role of the Public Procurement Review Service in investigating procurement and payment abuse in the public sector.”

ECA also hailed the strengthening of the UK Procurement Bill, which makes 30-day payment an implied term for most public sector contracts. The Bill is currently being debated in parliament.

Ahead of the review, ECA was one of six advisers to the Cabinet Office asked by Baroness Neville-Rolfe to a meeting on the fitness for purpose of the UK Procurement Bill after the recent changes in government.

ECA, through its work with industry umbrella body Actuate UK, has been championing SMEs in the construction industry by helping to draft legislation to protect retentions, ensure 30-day payment, and make payment data transparent.

A full BEIS consultation document is expected to follow in the coming weeks. The 12-week consultation, forming part of the review, will set out specific proposals on renewal and improvement of these duties.