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Government warns, large firms must make prompt payments

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The Government is calling on larger companies to follow the example of public sector departments and to make sure they pay smaller businesses on time.

Late payments are consistently sites by small business owners as one of the top problems they face. According to Bacs, the automated payments body, half of Britain's SMEs are affected by late payments and they are collectively owed £24bn by both the public and private sectors.

Cabinet Office minister Francis Maude said he expected all government contractors to settle invoices with subcontractors "well within the 30-day limit".

He added "Prompt payment is crucial to smaller companies. The Government has an excellent record on paying our bills quickly and we expect our suppliers to do the same and pay sub-contractors well within the 30-day limit.

"We will be keeping a close eye on how the big suppliers choose to pay their sub-contractors."

Whitehall departments are to monitor payments as part of their contract management processes and "won't shy away from naming and shaming those that we find have failed to pay promptly", Maude added.

SMEs themselves will also be able to anonymously identify sluggish payers through the Cabinet Office's "Mystery Shopper" service and the results will be published on its website.

"When work has been done, especially by an SME, it is just inexcusable not to pay up quickly for that service," Maude said.

Getting debtors to pay on time can be a time consuming and difficult task. With troublesome debtors it can become necessary to seek specialist help.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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