Chancellor announces action on late payments

In his Autumn Statement the Chancellor announced that firms would be excluded from bidding for large (£5m+) government contracts if they have payment times of over 55 days by April 2024, reducing to 45 days by April 2025.

This was part of a range of measures published today in the Prompt Payment and Cashflow Review. The review found that while payment times have come down over the last decade, SMEs were, on average, owed £22,000 in late payments in 2022.

The review contains a number of key points highlighted in ACCA’s submissions to late payment consultations in recent months, including the need to strengthen the powers of the Small Business Commissioner’s Office, improve reporting requirements, enforcement thereof, and better signposting of tools and advice to support small businesses.

Key changes will include:

• renaming and strengthening the Small Business Commissioner function, including investigatory powers and closer links to the Department for Business and Trade to enable stronger enforcement (including more naming and shaming)
• extending payment reporting requirements and increasing the transparency of this data
• better signposting via Enterprise Hubs, trade bodies, professional bodies, HMRC and Companies House
• better guidance for small firms on negotiating good payment terms and further research on the impact of late payment on small businesses
• working with the FCA to embed payment practices into ESG reporting
• reviewing the Prompt Payment Code every two years.