Wednesday 20th January, 2021
The government has announced an overhaul of the Prompt Payment Code to crack down on delayed invoices owed to small businesses. According to the changes, companies that have signed up to the Prompt Payment Code (PPC) will be obliged to pay small businesses within 30 days – half the time outlined in the current Code.
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. According to the PPC.
Businesses owners, Finance Directors or CEOs will be required to take personal responsibility by signing the Code, acknowledge that suppliers can charge interest on late invoices under the Code and that breaches will be investigated. Those signed up to the Code will redouble their efforts to ensure payments are made on time and breaches will continue to be publicised.
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.”
The changes coming into effect immediately are:
• Requiring CEOs or Finance Directors, or the business owners where it is a small business,
to personally sign the Code to ensure responsibility for payment practices is taken at the
highest level of an organisation
• Introducing a new logo for signatories to use in external communications to show their
commitment to the Code, making it more damaging to a company’s reputation to breach it
• Acknowledgement as a condition of signing the Code that suppliers can charge interest on
• Enabling administrators of the Code to investigate breaches based on third-party
Interim Small Business Commissioner Philip King said: “I am delighted to support the reformed Prompt Payment Code. In addition to their current public commitment to pay 95% of all payments to their supply chain within 60 days, signatories of the reformed Code have committed to paying 95% of their small business suppliers within 30 days. I commend those signatories who make further individual commitments to go further and settle invoices sooner."