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Small Business Commissioner helps small firms resolve payment disputes

The role of the Small Business Commissioner (SBC) was created under the Enterprise Act 2016. The SBC is now available to accept complaints from small businesses with a view to helping them resolve payment disputes with larger businesses and tackle unfair payment practices. The service impartial, independent and free to use. Although complaints will result in a finding it will not be legally binding.

The SBC is also of relevance to larger businesses. They need to be aware that delaying payments to small businesses or otherwise adopting unfair payment practices will be more risky going forwards. Engaging in such conduct will mean they run the risk of a complaint being made and subsequent adverse findings being publicised. The SBC has the discretion to decide whether to publish its findings in a report – effectively ‘naming and shaming’ larger businesses.

  • Almost half of small and medium-sized businesses have struggled with late payments in the last year, according to research by the Institute of Directors (IoD).
  • Of the 787 business leaders surveyed, 48% have faced issues with late payments since April 2017.
  • About 3 in 10 (31%) said this was the result of an “excessively bureaucratic payments system” in the company being invoiced.
  • Others noted a disparity between the practices of smaller and larger businesses, with 23% claiming larger firms in their supply chain used “grossly unfair” terms or practices.
  • If small businesses were paid on time, it could boost the economy by an estimated £2.5bn annually.

There are various rules as to: eligibility; the process to follow; the form and content of complaints; the time limits for presenting complaints (12 months). The SBC’s website is now live and provides information to guide businesses through the rules, requirements and exclusions.

Prior to using the complaints service the small business should attempt to resolve the dispute and obtain payment from its customer, unless there is good reason not to have done so. Larger businesses should deal with complaints in a timely manner – delay could lead to the escalation of issues to the SBC.

If legal proceedings, mediation, adjudication or arbitration are already underfoot the SBC cannot consider the underlying complaint. Small businesses therefore need to consider at an early stage what option it wishes to pursue.

Nadi Fabri – BTMK