Minister for small business confirms measures to tackle late payments
Measures will enforce payment within 60 days and attempt to make 30 day terms 'the norm'
New measures to support the Prompt Payment Code (PPC) and tackle the scourge of late payments which impacts upon UK small businesses have been supported in a letter to PPC signatories from Margot James; minister for small business.
The letter has also been backed by Philip King; executive of the Chartered Institute of Credit Management.
Although it will not be enforcing 30 day terms, the letter confirms that paying invoices within 30 days should increasingly become ‘the norm’ and that paying within 60 days will be a requirement unless there are exceptional circumstances. For example, if a company demonstrates that it applies different terms that actually benefit their small suppliers.
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The letter also confirms the appointment of a small business commissioner to provide help and advice on areas such as achieving prompt payment and the Statutory Duty to Report. Coming into force on 6 April 2017, the Duty to Report requires large businesses to report on their payment practices.
In January, research from Zurich revealed that 53% of the UK’s small businesses are owed an estimated £255bn in late payments. More recently, data from Paym showed that the UK’s sole traders have abandoned £8.1bn worth of late payments in the last year.
In 2015, the government announced new measures within the Small Business Enterprise and Employment Act to further strengthen the PPC, which came into force in May this year.
James commented: “Prompt payment can make all the difference to small businesses, boosting their cashflow and allowing them to invest in growth for the future. Although we have seen some progress, there are still too many business owners across the country who have not been paid on time by their customers.
“We need a culture change to stamp this out and the Prompt Payment Code continues to play an important role in bringing this about, alongside a package of measures taken forward by government and industry.”