The UK government has introduced the Small Business Protections Bill in Parliament, putting its plans for tackling late payments on the legislative timetable.

The Bill covers all of the measures for tackling late payments outlined in the King’s Speech, including a 60-day cap on payment terms, interest of 8% above Bank of England base rate and new powers for the Small Business Commissioner.

Citing government research that found that 38 businesses close every single day due to late payments – well over a thousand a month – the government has said that the Bill will “fundamentally change” the way that businesses pay each other.  

Additionally, the Small Business Commissioner will be given new powers to investigate poor payment practices, adjudicate disputes, and fine persistent late payers. 

The boards or audit committees of persistently late‑paying large companies will also be required to publish explanations of poor payment performance and the steps they are taking to improve it. 

The Bill builds upon legislation first laid out in the 1998 Late Payment of Commercial Debt Act.  

A win for small businesses

ICAEW has been pushing for action on late payments and poor payment terms for several years, liaising with government and the Small Business Commissioner on what can be done to help small businesses. 

“Our members have told us for many years that late payments is not only a drag on their business – spending valuable time chasing payments when they could be winning more work and growing their business – but can pose an existential threat,” said Iain Wright, ICAEW’s Chief Policy and Communications Officer. “That is why ICAEW has campaigned for the Small Business Commissioner to be given increased powers and worked with government to promote the importance of prompt payment.”

Wright was pleased to see the Small Business Protections Bill in the King’s Speech, and that it is one of the first pieces of legislation to start its passage through Parliament. ICAEW is supportive of its measures, he said. “We will continue to pay close attention to the Bill on behalf of members to ensure it achieves all it can on behalf of small businesses.”