UK tightens rules on big businesses to get £23bn in late payments owed under control

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Dozens of Tory MPs have written to Rishi Sunak demanding “emergency” funding for councils which they say are facing cash pressures “like never before” amid an election year.
Dozens of Tory MPs have written to Rishi Sunak demanding “emergency” funding for councils which they say are facing cash pressures “like never before” amid an election year.

The Government has tightened rules in its Prompt Payment Code which slashes the time small businesses can expect to be paid by larger firms from 60 days to 30 days for late payments.

Late payments mean currently more than £23bn is thought to be owed in outstanding invoices at a time when cashflow for small buinesses is tight and businesses cannot trade to their full potential

The code, which is voluntary, implores signatories to pay invoices owed within two months. That will now be lowered to 30 days.

Big businesses which flout their pledges will be names and shamed by the Government, the Department for Business, Energy and Industrial Strategy (Beis) said this afternoon.

Close to 3,000 larger businesses have committed to the Prompt Payment Code.

Federation of Small Business head Mike Cherry said of the hefty bill owed to the UK smaller firms:

“A late payment crisis was massively stifling the UK economy before Covid hit. The pandemic has deepened it.

“FSB has campaigned for good payment practice to become the norm across the UK economy, not least through a toughening of the Prompt Payment Code and the adoption of 30 days as the new maximum payment period”.