In a major overhaul of late payment rules, the government plans to legislate for a 60-day payment period with penalties for non-compliance and audit committees will have to monitor corporate behaviour
Late payment costs the UK economy £11bn a year and shuts down 38 businesses every day, putting enormous stress on small and medium sized businesses.
The government plans to effectively limit payment terms between UK businesses to 60 days by introducing legislation to amend the Late Payment of Commercial Debts (Interest) Act 1998, removing the exemption that allows businesses to agree to payment terms longer than 60 days if considered not ‘grossly unfair’.
This proposal is now out for consultation, and the government set out its longer term plan to stamp out bad payment practice, saying that subject to further consultation it ‘may subsequently reduce this limit from 60 days to 45 days after five years’.
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