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Late payers to be flagged up to businesses under new proposals

The Small Business Commissioner, Paul Uppal, has recommended a new “traffic light” system that will warn smaller firms which businesses have a consistent record of late payment and those most likely to request longer payment terms.

It is thought that around £2.5 billion is lost annually within the economy due to late payments and they have been attributed to the closure of around 50,000 businesses each year.

Under the new proposals, current payment data collected by the Government will be used to highlight businesses with a poor record.

Large companies have been required to report supplier payment records twice a year since 2017 and so it is thought that the Government already holds a good record of poor payers. However, companies which fail to report payment practices will also receive a red light under the new system.

The Small Business Commissioner explained that his plans would allow smaller suppliers to make better decisions on who they work with.

The Government has outlined its own measures that will ensure that public contracts are only given to companies that can demonstrate prompt payment to their own suppliers.

At present, the Commissioner does not have the authority to distribute late payment fines, and his department only managed to recover £2.1 million in unpaid invoices his first year in office.

Link: Small Business Commissioner calls for ‘traffic light’ warning system

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Businesses get to grips with new employment costs

Employers across the UK are starting April with a sudden increase in employment costs following a rise in workplace pension contributions and minimum wage costs.

The sharp increase in expenditure on staff couldn’t come at a worse time for business who are experiencing growing uncertainty over the UK and wider global economy.

Minimum contributions for workplace pensions have risen to eight per cent this month, with a minimum contribution of three per cent from employers.

The five per cent gap between minimum employer contributions and the minimum overall contributions must be made up by contributions from the employee. However, employers can increase their contribution to reduce the impact on employees, should they wish.

The minimum contribution only applies to employees earning £10,000 a year or more and percentage contributions are calculated using only the employee’s earnings between £6,136 and £50,000. This is an increase from 2018’s income threshold of £6,032 to £46,350.

Meanwhile, many employers will also see wage costs increase with the introduction of new statutory wage levels. As of 6 April 2019, employers must pay the following hourly rates for staff on the minimum or national living wage:

  • 25 and over (national living wage) – £8.21
  • 21 to 24 – £7.70
  • 18 to 20 – £6.15
  • Under 18 – £4.35
  • Apprentice – £3.90

In some cases, the increase in the statutory minimum wage could push up the additional amount that employers are required to pay towards workplace pensions, meaning that employers with a large number of minimum wage workers, will be hit harder.

Link: National Minimum Wage and National Living Wage rates & Workplace pensions

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