Companies will be penalized for late supplier payments

New legislation aims to tackle late payment issues affecting UK businesses.

Companies face fines for late payments to suppliers

The UK government is set to introduce fines for larger companies that frequently pay their suppliers late. Prime Minister Sir Keir Starmer emphasized the importance of timely payments, stating that late payments cost the UK economy about £11 billion a year and result in the closure of 38 businesses daily. The proposed legislation will mandate that companies pay their suppliers within 30 days after receiving an invoice, with a maximum delay of 60 days, decreasing to 45 days over time. This measure targets the hardships faced by small and medium-sized enterprises, allowing them to invest more time in growth rather than chasing payments.

This initiative addresses a long-standing issue affecting small businesses, which often find themselves struggling due to late payments from larger firms. By imposing fines, the government aims to create a fairer business environment. However, while the measure is meant to protect small enterprises, critics argue that it does not fully consider broader economic challenges, including rising costs and the need for more comprehensive support for struggling businesses.

Highlights

As the government pushes for timeliness in payments, the impact on larger companies and their financial practices remains to be seen.