Actuate UK has actively participated in recent Government consultations on Payment Practices and Performance Regulations (2017) and the role of the Small Business Commissioner. The alliance called for reforms that would hold larger companies accountable for timely payments to their supply chains. In their submissions, Actuate UK highlighted the detrimental effects of delayed payments on SMEs in the engineering services sector. SMEs often find themselves in a position where they provide more than they receive, rely on trade credit, and face increased risk of insolvency.

Rob Driscoll, ECA Director of Legal & Business, speaking on behalf of Actuate UK's Business Group, commented:

"Establishing an open source of data on large companies' payment performance and practices in 2017 was a game-changing achievement by the Government. However, the current business challenges necessitate further reforms to ensure the continued credibility and integrity of the system."

Actuate UK supports the continuation of the Payment Practices and Performance Regulations (2017) but proposes several key reforms, including:

1. Including metrics that consider the value of payments to prevent companies from exploiting the system by promptly paying low-value purchase ledger invoices while delaying higher-value supply chain ledger invoices.

2. Requiring reporting on cash retentions in qualifying construction contracts.

3. Implementing third-party authentication of the reported data.

4. Clarifying the Regulations' guidance to eliminate ambiguity, especially regarding how metrics should be applied to payments made through supply chain finance systems.

In its submission, Actuate UK assesses the impact of these reforms and suggests the utilization of digital tools and streamlined processes to minimize any potential disproportionate cost increases for businesses. The alliance firmly believes that a more rigorous system of accountability will foster fair payment practices across the supply chain and ensure the sustainability of SMEs.

Furthermore, Actuate UK has urged the Government to expand the Small Business Commissioner's remit to officially include construction. Given the industry's high concentration of SMEs grappling with prolonged and late payment issues, this adjustment would be highly beneficial.

Additionally, Actuate UK suggests empowering the Small Business Commissioner, as the administrator of the Prompt Payment Code (PPC), to investigate complaints filed against signatories, including construction companies. The alliance proposes that the Commissioner's office should have the authority to levy fines against PPC signatories found in breach of the code's obligations. This enhancement would incentivize SMEs to report issues related to the code and other prompt payment concerns.

Actuate UK's proactive engagement and proposed reforms aim to alleviate the financial burdens placed on SMEs within the engineering services sector and promote a fair and sustainable supply chain.

Click here for more details and to read a summary of the submission.