Government Confirms a Late Payments Bill Will Be Progressed

Today’s King’s Speech, which sets the forthcoming agenda for the government’s work over the next parliamentary term, included confirmation that a Small Business Protections (Late Payments) Bill will be progressed into being made law.

The legislation will target large firms paying suppliers late by capping payment terms at 60 days, imposes mandating 8% statutory interest, and strengthens the Small Business Commissioner’s enforcement powers

Emma Jones CBE, the UK’s Small Business Commissioner, has welcomed the confirmation in the King’s Speech today.

Emma Jones said: “This is excellent news for UK businesses. Currently late payments cost the UK economy £11 billion a year with founders spending over 86 hours chasing overdue invoices. I am committed to get money moving in the economy and free up small businesses time to grow and thrive. Ending late payments will be critical to realising this goal.”

National Federation of Roofing Contractors

The confirmation follows a campaign by the National Federation of Roofing Contractors (NFRC) lobbying for action on the topic, including ending the practice of retentions in the construction industry. The organisation had welcomed the launch of the late payments consultation and strengthening of the Small Business Commissioner’s powers earlier this year.

The recent UK Government consultation response proposed several measures to remedy the UK’s late payment business culture.

It will give the Small Business Commissioner power to investigate businesses suspected of poor payment practices, adjudicate payment disputes outside of the court process, and levy financial penalties on businesses that persistently pay their suppliers late.

Maximum payment terms of 60 days will be standardised in contracts by law, with strictly limited exemptions.

It will also mandate interest on late payments at 8% above the Bank of England base rate.

The introduction of a a time limit for raising disputes about payments has been particularly welcomed by the construction industry, where it is not unusually used as a tactic to delay payment.

The new law is also expected to require the boards or audit committees of any persistently late-paying large company to publish commentary on why payment performance is poor and what actions they are taking to fix this.

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