On 19 September 2024, the government announced several measures to tackle the late payment of business invoices. The government sees late payment of invoices as particularly problematic for smaller businesses and the self-employed.
The proposed package of measures includes:
• A new Fair Payment Code, to replace the existing Prompt Payment Code. The Fair Payment Code will open for signature in the autumn. Businesses will need to demonstrate they have met good payment standards before being awarded official code status. This will be either gold, silver or bronze status according to the business' payment practices. The objective is to make 30-day payment periods the standard for which businesses aim. • The introduction of new legislation, to be brought forward in the coming weeks, which will require all large businesses to include payment reporting in their annual reports. It is currently unclear how this fits with existing legislation or how wide its scope will be. • An increase in enforcement activity to ensure large companies and LLPs comply with their statutory reporting obligations concerning their payment practices. • Proposals, subject to consultation, for the reform of audit and audit committees, with the objective of enabling small businesses to be confident that they will be paid promptly. • The publication of updated guidance on business payment practices and reporting requirements). The consultation will be launched "in the coming months". The government says that it will consider a range of further policy measures to tackle poor payment practices.
The proposals reflect a commitment in the Labour Party manifesto to tackle the late payment of supplier invoices. However, the problem of late payment is not a new one and a range of mechanisms and obligations has developed to tackle it, albeit with a cross-party consensus that further reform is needed.
Date: 30 September