The Bank of England’s Monetary Policy Committee (MPC) has increased rates to 0.5%. The MPC had cut the base interest rate to an historic low of 0.25% in August 2016, two months after the EU referendum.
The National Federation of Builders (NFB) believes that this decision will help construction SMEs chase late payments across their supply chains. The Late Payment of Commercial Debts Regulations of 2013 allows companies that are owed payments to charge interest at 8% of the debt plus the Bank of England’s base rate.
Richard Beresford, chief executive of the NFB, said:
“The interest rate rise will give SMEs more leverage when chasing late payments, but there is still some way to go. When the Bank of England previously cut interest rate in 2016, we asked the Government to increase efforts to tackle late payment more aggressively. Construction continues to have the worst payment record of any industrial sector, with SMEs owed more than £30 billion in unpaid invoices.
“SMEs make up for more than 99% of the construction industry. This is an opportunity for SMEs to test the small business commissioner who can deal with late payment claims, confidentially if required.”