Small business owners want the UK government to outlaw late payments as new figures reveal that half of SMEs face financial stress due to not being paid on time.

In a new survey carried out by YouGov and reported by The Sunday Times, 61 per cent of small business owners strongly support the suggestion that the government should legislate to force companies to pay suppliers on time.

The idea put forward in the survey was to create a mandatory 45-day payment term for all invoices. Not only would such a move strengthen the hand of small suppliers and contractors when payments become late, it would also curb the practice of big businesses imposing punitive conditions, such as the notorious 120-day terms collapsed outsourcing giant Carillion insisted on.

Just 11 per cent of firms with fewer than 250 employees are opposed to the idea of legislation.

Read more: Small Businesses Demand Law to Stop Late Payments

It sounds like something out of a Hollywood gangster film - a $50 million fraud, an attempt to launder the proceeds by buying a Picasso painting, and an undercover FBI agent who foiled it all.It sounds like something out of a Hollywood gangster film - a $50 million fraud, an attempt to launder the proceeds by buying a Picasso painting, and an undercover FBI agent who foiled it all.

But no, this is a real-life story. In place of gangsters, you can substitute stockbrokers whose crime was illegally fiddling share prices in a worldwide scam. After being caught red-handed, their actions led to the collapse of the firm they worked for, London-based Beaufort Securities, which was declared insolvent by the Financial Services Authority (FSA) in March.

Read more: Beaufort Collapse Reveals Stockbroking Ain’t No Oil Painting

The lessons of the 2008 banking crisis seemed obvious. Economic growth built on the shaky foundations of unsustainable debt was nothing more than a house of cards ready to come crashing down.The lessons of the 2008 banking crisis seemed obvious. Economic growth built on the shaky foundations of unsustainable debt was nothing more than a house of cards ready to come crashing down.

A decade on, it’s hard to make a case that much has changed. On the face of things, there is a renewed mood of optimism that we might be on the verge of good times again. The IMF’s latest World Economic Outlook upwardly revised its prediction for global economic growth to 3.9 per cent for 2018 and 2019, up 0.2 per cent from its forecast just six months ago. 

Read more: Global Growth Forecasts Are On the Up… But So is Debt

Contractors and SME suppliers in the UK could finally be in line for legal protection from losses in the event of a client collapsing.

In the wake of several high-profile insolvency cases such as that of Carillion, which raised fears that suppliers could be left billions out of pocket in unpaid invoices, the government has launched a review of corporate governance regulations for companies entering insolvency.

Read more: UK Government Consults on Insolvency Protections for Suppliers

The collapse of construction giant Carillion could spell havoc for the UK’s small business economy, the country’s SME trade body has warned.

The massive building services conglomerate has been forced into liquidation with debts in excess of £2bn, putting 20,000 jobs at risk. As a major government contractor, there are immediate concerns over infrastructure and maintenance projects covering schools, hospitals and transport.

Read more: Carillion Collapse Sends Shockwaves Across The UK

Wholesaler Palmer & Harvey has entered administration after failing to restructure significant debts owed to suppliers. The Palmer & Harvey Group, the UK’s fifth-largest privately owned business and the country’s largest tobacco supplier, had been in takeover talks with Carlyle, the private equity firm.

But after talks broke down, directors from several Palmer & Harvey group companies made an application to London’s High Court to enter administration to help ease an increasingly unmanageable debt burden.

Read more: Palmer & Harvey in administration after debt burden bites

Fears over the future of embattled toy retailer Toys R Us continue to mount after its UK business announced it was to seek a Company Voluntary Arrangement (CVA) to handle a mounting debt crisis.

The company, which is thought to have made a trading loss for seven out of the past eight years, has announced plans to close a minimum of 26 stores in the UK, with a loss of 800 jobs.

Read more: Toys R Us to Seek CVA with UK Store Closures Announced

Wholesaler Palmer & Harvey has entered administration after failing to restructure significant debts owed to suppliers.

The Palmer & Harvey Group, the UK’s fifth-largest privately owned business and the country’s largest tobacco supplier, had been in takeover talks with Carlyle, the private equity firm.

Read more: Palmer & Harvey Enter Administration After Debt Burden Bites