The Government has launched a new ‘Fair Payment Code’ which aims to “tackle late payments, to reward good practices and ensure SMEs are paid on time”.
We previously commented on the Code here. It was announced as part of a package of reforms to tackle what the Government referred to as the “scourge of late payments”. The new Code requires signatories to commit themselves to complying with the three ‘fair payment principles’ of being ‘Clear, Fair and Collaborative’. Companies will also be awarded a status depending on their payment practices as follows:
Gold: Organisations that pay at least 95% of all invoices within 30 days;
Silver: Organisations that pay at least 95% of all invoices within 60 days, including at least 95% of invoices to small businesses within 30 days;
Bronze: Organisations that pay at least 95% of all invoices within 60 days.
Organisations of any size with a UK registered office can now apply to register their interest in receiving an award.
Commenting on the launch of the Code, the Small Business Commissioner, Liz Barclay, said “the Fair Payment Code is our response to all those suppliers who begged for a more aspirational, robust and ambitious approach to changing the business to business payment culture in the UK. It also gives a clear signal of intent on the part of Government. We want suppliers paid within 30 days with payment beyond the due date a rare event. We want longer contractual payment term to be recognised as potentially detrimental to vital supply chains. We want businesses of all sizes to commit to fair and quick payments and to avoid harmful disputes. This new Code will drive a better payments culture and benefit everyone.”
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This article first appeared on Lexology. You can find the original version here.
