New Measures Introduced to Address Late Payments

Introduction

Late payments remain an important challenge for transport operators, drivers, and compliance professionals, affecting cash flow and business stability. Recent government measures aim to address this issue by imposing stricter rules on large businesses that delay payments to smaller suppliers.

New Government Measures on Late Payments

The government has introduced several initiatives to tackle late payments, including granting the Small Business Commissioner enhanced powers. These powers include the ability to resolve late payment disputes through a new adjudication function, avoiding the need for court proceedings.

Additionally, a 60-day maximum payment term will be imposed on all large firms when paying smaller suppliers. Commercial contracts will be required to include mandatory statutory interest on late payments, set at 8% above the Bank of England base rate.

Role of the Small Business Commissioner

Emma Jones, the Small Business Commissioner, emphasised her commitment to improving payment practices for small firms. She stated that the new measures would strengthen her office’s ability to challenge persistent late payers and ensure small businesses have a stronger voice regarding payment terms and interest on overdue payments.

Industry Response

The Road Haulage Association (RHA) welcomed the government’s crackdown on what it described as a “late payment culture” that harms businesses. RHA Managing Director Richard Smith highlighted that late payments cost the UK economy an estimated £11 billion annually and place small businesses at a competitive disadvantage.

While the RHA supports the introduction of a 60-day payment cap, it suggested that the government could have gone further by reducing the cap to 30 days. This, the RHA argued, would better support haulage, coach, and van operators facing increased fuel costs and cash flow pressures.

Mi Compliance Insight

Transport operators and compliance professionals should review their contracts and payment terms to ensure compliance with the new regulations. Monitoring payment schedules and understanding the statutory interest provisions will be essential to managing cash flow effectively.

For further guidance on adapting to these changes, transport businesses are encouraged to contact Mi Compliance for expert advice and support.

Contact Mi Compliance

Source: https://motortransport.co.uk/crackdown-on-late-payments-costing-economy-11bn/89783.article