The Commercial Payments Bill (previously called the Small Business Protections Bill), which will deliver legislation aimed at tackling the issue of late payment of invoices suffered by small firms, is being introduced to the House of Lords today.
First announced in March and confirmed in the King’s Speech, the Bill includes stronger powers for the Small Business Commissioner to investigate, adjudicate
There will also be a 60-day cap on payment terms for large firms, mandatory interest on late payments, and action to ban the practice of retentions in construction.
Other changes are requirements in secondary legislation for large companies to publicly report the amount of interest they have paid and the interest they owe, and a requirement for boards or audit committees of persistently late-paying large companies to publish commentary on why their payment performance is poor and actions they are taking to fix it.
Late payment has long been an issue for small businesses. Unpaid invoices cause the closure of 38 businesses every day and cost the economy an estimated £11 billion a year.
Prime minister Keir Starmer said:
“Small businesses are the backbone of our economy – run by people who take risks, create jobs and keep communities going. This government is firmly on their side.
“Too many small business owners are spending hours chasing money they are owed and when payments don’t come through, the cost is personal. It’s about whether you can pay your staff, keep the lights on, or invest in your future.
“Today we’re changing that with the toughest action on late payments in a generation, so small businesses get paid on time and get the backing they need to grow, create jobs and serve their communities.”
Small business minister Blair McDougall said:
“I’ve spoken to too many business owners who do everything right and are still left lying awake at night wondering how they’ll pay their staff or cover their bills because they haven’t been paid what they’re owed.
“Introducing this Bill is about standing up for those people, to restore fairness, dignity and security for small business owners and the self-employed, so they can focus on doing what they do best: growing their businesses and the economy.”
Emma Jones CBE, Small Business Commissioner and SMEWeb columnist, said:
“It is exciting to see the Bill tacking late payments being introduced into Parliament this week. Currently late payments cost the UK economy £11 billion a year with founders spending over 86 hours chasing overdue invoices.
“I am committed to get money moving in the economy and free up small businesses time to grow and thrive. Ending late payments will be critical to realising this goal and this Bill is on the path to achieve this.”
Advice for small businesses on tackling late payment
- Small Business Commissioner: Top tips to contract well and get paid on time
- How SMEs can reduce late payment from customers
- Tackling late payments in an uncertain business landscape