This week the Commercial Payments Bill, which seeks to tackle late and poor payment practices, has been introduced to Parliament. The Bill seeks to give stronger powers to the Small Business Commissioner, including the 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.
These new powers are proposed to work alongside other measures including the interaction of maximum payment terms of 60 days, with strictly limited exemptions and mandated interest on late payments at 8% above the Bank of England base rate. There will also be a time limit for raising disputes upon payments and a requirement for 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.
Prime Minister Keir Starmer said:
“Small businesses are the backbone of our economy – run by people who take risks, create jobs and keep communities going. This government is firmly on their side.
“Too many small business owners are spending hours chasing money they are already owed and when payments don’t come through, the cost is personal. It’s about whether you can pay your staff, keep the lights on, or invest in your future.
“Today we’re changing that with the toughest action on late payments in a generation, so small businesses get paid on time and get the backing they need to grow, create jobs and serve their communities.”
Emma Jones CBE, the UK’s Small Business Commissioner said:
“It is exciting to see the Bill tacking late payments being introduced into Parliament this week. 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 and this Bill is on the path to achieve this.”
Business Secretary Peter Kyle said:
“Costing the UK economy £11bn every single year, late payments choke growth, cost jobs, and force too many good businesses to close. That ends today.”
“Through this landmark bill we are delivering the toughest payment reforms in over a generation, to give the UK the strongest legal framework in the G7, and back small businesses with the certainty they need to grow and thrive.”
Late payments close 38 businesses every single day because they are not paid on time. That’s the equivalent of 266 a week, and well over a thousand in any given month.
Minister for Small Business and Economic Transformation, Blair McDougall said:
“I’ve spoken to too many business owners who do everything right and are still left lying awake at night wondering how they’ll pay their staff or cover their bills because they haven’t been paid what they’re owed.”
“Introducing this Bill is about standing up for those people, to restore fairness, dignity and security for small business owners and the self-employed, so they can focus on doing what they do best: growing their businesses and the economy.”
The Commercial Payments Bill builds upon and strengthens legislation first laid out in the 1998 Late Payment of Commercial Debt Act, over 25 years ago. It will give the government the strongest legal framework on late payments in the G7.