Convened and chaired by Labour MP Debbie Abrahams in April this year, the all-party panel of MPs heard from a range of business groups and bodies, representing different industries, that gave evidence on the impact of poor payment practice.
The latest BACS data shows that at the end of 2012 SMEs were owed over £36.4bn in late payments and Abrahams said one of the major issues highlighted by the evidence given during the inquiry was one of leadership.
She added: "Until top CEOs, and their executive board members, make a decision to act ethically in business, and treat our small and medium sized businesses fairly, this problem will persist.
"The public has grown tired of hearing about huge, greed driven, pay packets, pay-offs for failure and tax evasion; but allowing a culture of late payment to persist unchallenged is another board-level decision that directly effects ordinary, hardworking, people across the country."
Among the recommendations to government published in Abrahams’ report, is the introduction of a Retentions Monies Bill where contractually agreed monies would be retained in an independent trust until all obligations were met, at which time the payment will be made.
Other recommendations include that large businesses managing supply chains should publish performance data on their payment history, SMEs should be given free, high quality financial management advice on avoiding late payments and that the Institute of Credit Management should amend the Prompt Payment Code to reflect the issues highlighted by the inquiry.
Abrahams said: "I am also grateful to my colleagues from across the political spectrum for their participation on the Inquiry panel and demonstrating that, although we may have different political views, we can work together to find a solution to this persistent problem."
Mike Cherry, national policy chairman, of the Federation of Small Businesses, which helped inform the inquiry said: "We have said for some time that the Government and local authorities should include terms in contracts for prompt payment to be passed down the supply chain.
"This report provides a good starting point to open up the discussion on what can be done to make sure small firms are paid promptly for the work they have done."
Forum of Private Business chief executive, Phil Orford, added: "The government needs to give serious consideration to refusing any public sector contract to big businesses who don’t pay suppliers in an acceptable time frame. Or indeed only work with those companies who’ve signed the Prompt Payment Code.
"With more than £300bn of capital spending announced in the recent spending review, this would have maximum effect at no cost to the government, but really help in the battle against poor payment practices so widespread in the UK economy these days," he said.
