Government to consult on late payment rules

Companies that pay their suppliers late may be fined, the government has said.

Earlier in October, sister website BusinessZone reported that Prime Minister David Cameron said that he will consult on late payment rules later this year.

The consultation will consider late-payment issues including:

• What can be done to increase transparency around which companies are good at paying and which ones are not
• How the Prompt Payment Code can be strengthened, and whether there is more that can be done to hold companies to account against it
• Whether more can be done to enforce existing legislation, including the provisions on payment terms – for instance the prohibition of 'grossly unfair' payment terms
• What can be done to encourage more companies to make use of their existing statutory right to interest for late payments
• Whether there is a case for further legislation or penalties

"It's not right that suppliers are not getting paid on time for the work they do and the services they provide and I know that late payment can have devastating effects on our small and medium sized businesses," Cameron said.

Federation of Small Businesses National Policy Chairman, Mike Cherry said: “We know around four in 10 businesses that are paid late will go on to pay their own suppliers late or struggle to pay their staff. It cannot be right that small businesses are in effect being asked to lend to their large customers.  This can only have a negative impact on growth and investment.”

Katja Hall, CBI Chief Policy Director, said the business group backed the “Prompt Payment Code” but said that were other ways of addressing late payment such as suppliers choosing to work with customers through supply-chain finance agreements."