New measures to support Prompt Payment Code (PPC) have been backed in a letter sent to PPC signatories from Small Business Minister, Margot James and chief executive of the Chartered Institute of Credit Management, Philip King.
The letter confirms that paying invoices within 30 days should become the standard and that payments within 60 days will be a requirement unless there are exceptional circumstances which will be considered on a case by case basis.
From 6 April 2017, it will be a statutory requirement for large businesses to report on their payment practices annually.
More than 1,800 businesses are signed up to PPC, committing to fair and equal treatment of payments between owners and suppliers.
Research from Zurich in January 2016 found that 53% of small businesses are owed an estimated £255 billion in late payments.
IPSE director of policy and external affairs, Simon McVicker, said:
“Despite recent progress, including on 30 day payment terms through the supply chain, late payment remains a huge problem for the smallest businesses. A staggering three quarters of disputes between freelancers and their clients relate to payment issues.”
Small Business Minister, Margot James, added:
“We need a culture change to stamp this out and the Prompt Payment Code continues to play an important role in bringing this about, alongside a package of measures taken forward by government and industry.”