Reforms to the Prompt Payment Code
Last week the Government announced reforms to tackle the continuing problem of large companies making late payments to small businesses.
Late payment is an ongoing problem that the Government has sought to crack down on through the voluntary Prompt Payment Code (“the Code”), which is overseen by the Office of the Small Business Commissioner.
The immediate changes to the Code include the:
— requirement of a CEO, Finance Director, or business owner to personally sign the Code to ensure responsibility for payment practices is taken at the highest level of an organisation;
— introduction of a new logo for signatories to use in external communications to show their commitment to the Code;
— acknowledgment that as a condition of signing the Code, suppliers can charge interest on late invoices; and
— authority for administrators of the Code to investigate breaches based on third party information.
In addition, on 1 July 2021, signatories to the Code will be required to pay 95% of small business suppliers within 30 days (currently 60 days).
The Government will continue to publicise the names of signatories found in breach of the code.
It is hoped the reforms, together with the increased powers of the Small Business Commissioner will help to protect jobs and growth at a critical time for the UK’s economic recovery.
This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. For advice, get in touch with your usual Greenwoods GRM contact or scroll down to complete our enquiry form.