Companies that do not pay small suppliers on time are contributing to the high failure rate of startups and should be “black-listed”, according to business guru Sir John Harvey-Jones.
Former ICI boss Harvey-Jones said that the “British business disease of late payment” was condemning thousands of businesses to closure every year.
“We still see something like 70 per cent of new businesses going bust within their first five years, and all too many of them collapse with a full order book but an empty bank account.
“In my view, late payment is criminal, and any company – no matter how big – should be black-listed if it breaches the agreed trading terms,” he said.
The government has introduced several measures over the past year aimed at preventing companies from delaying payment for services or products.
Firms in debt are now allowed to charge interest on late invoices and can apply for compensation through the courts.
