Action on invoices

Directors to sign code in late payment crackdown

Mike Cherry

Mike Cherry: ‘progress’

Chief executives and finance directors will be required to take personal responsibility for ensuring prompt payment to small businesses.

By signing the Prompt Payment Code directors will acknowledge that suppliers can charge interest on late invoices.

The move is part of a new crackdown on late payment by the Department for Business, Energy and Industrial Strategy.

From July, companies that have signed up to the code will be obliged to pay small businesses within 30 days – half the current time allowed.

Despite almost 3,000 companies signing the Code, poor payment practices are still rife, with many payments delayed well beyond the current 60-day target required for 95% of invoices.

Currently, £23.4 billion worth of late invoices are owed to firms across Britain, impacting on businesses’ cash flow and ultimate survival. 

The government is also seeking to strengthen the powers of the Small Business Commissioner (SBC) to ensure larger companies pay their smaller partners on time.

New powers proposed in a recently closed consultation include legally binding payment orders, launching investigations and levying fines.

Small Business Minister Paul Scully said: “We are relieving some of the pressure on small business owners by introducing significant reforms to the UK payments regime – pushing big businesses to pay their suppliers on time.

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