UK Public demands New Government action on Late Payments
Xero, the global small business platform, has released its ‘Settle Up’ report revealing that 62% of UK consumers surveyed believe addressing late payments should be a government priority. For decades, policymakers have vowed to tackle the dominance of large corporations over small businesses, which last year cost small enterprises an estimated £1.6 billion. The issue has become deeply rooted and a topic of public concern, with 80% of surveyed consumers now asserting that there is no justification for large firms to delay payments to their suppliers.
The report highlights public astonishment at the persistence of the problem. Over half (56%) are surprised that governments have not enacted policies to prevent large businesses from delaying payments to small suppliers, while 70% view it as a form of theft or bullying. Furthermore, 77% of consumers believe it is the government’s responsibility to ensure businesses act responsibly.
The UK’s public emotional response to late payments is evident, with 61% expressing shock at the scale of the issue and nearly 79% unwilling to see small businesses in their community affected. The empathy extends to the personal impacts of late payments: 86% of respondents indicated it would significantly increase personal stress, 47% would struggle to pay household bills, and 41% would find it difficult to buy food for themselves and their families.
Ethical buying trends suggest that firms with poor payment practices could face decreased sales. For instance, 72% of consumers would avoid companies that don’t pay suppliers on time; 79% consider late payments unethical; and 80% believe there is no excuse for late payments in an era of easy digital and contactless transactions.
Fair treatment of suppliers is becoming integral to companies’ ESG responsibilities, influencing consumer sentiment. For example, 70% of consumers are more likely to support businesses that pay their suppliers and small businesses on time, valuing this more than supporting local charities (52%) or paying fair taxes (56%).
Alex von Schirmeister, UK Managing Director of Xero, remarked, “Late payments keep business owners up at night. All they want is the cash they are owed, so they can invest, grow, and keep their heads above water. Now we see that the British public cares too. They are shocked at big business inertia and want to see governments take further action. That’s why new late payment legislation is needed, and we hope to see this announced in the King’s Speech next week.”
Towards a Solution
Addressing the underlying payments culture in the UK is crucial. Three-quarters (75%) of consumers believe large businesses should be encouraged to improve their payment practices. The initial step involves changing the terminology around late payments to convey the seriousness of the issue. A third of UK consumers suggest terms like ‘big business bullying’ (34%) and ‘big business theft’ (32%), but Xero advocates for ‘unapproved debt’ as it precisely describes late payments.
Moreover, large companies should be mandated to report the extent of unapproved debt they use to finance operations. The government should also consider a Fair Buyers’ Act to hold offenders accountable more effectively. Increased transparency through reporting data on late payments could help small businesses choose their suppliers wisely, celebrate companies with positive payment practices, and lead to commercial benefits for those companies.
