Originally written by Timothy Adler on Small Business
Large companies will have to settle 95 per cent of invoices from small business suppliers within 30 days from July 1, halving the late-payment window.
The government has cracked down on large companies that take too long to pay invoices in order to ease cash flow problems for thousands of smaller businesses.
Despite almost 3,000 companies signing the Prompt Payment Code poor payment practices are still rife, with many payments delayed well beyond the current 60-day target required for 95 per cent of invoices.
>See also: Small businesses spend hour and a half each day chasing late payments
Currently, £23.4bn worth of late invoices are owed to firms across Britain, impacting on businesses’ cash flow and ultimate survival.
Company directors, chief executives and finance directors will be required to personally sign the code to ensure responsibility for payment practices is taken at the highest level of an organisation.
Bosses will also have to acknowledge suppliers can charge interest on late invoices, and the code – overseen by the Office of the Small Business Commissioner on behalf of the business department – has allowed breaches to be investigated based on third-party information.
Kwasi Kwarteng, the business secretary, told The Times that