The government is tightening up the Prompt Pay Code (PPC) to encourage firms to pay invoices quicker and so improve cash flow for smaller firms. The intention is to act as an incentive for business debt recovery.
Business Minister Matthew Hancock says the PPC will now promote 30-day terms as standard and introduce a 60-day maximum limit. Unless firms can show there are exceptional circumstances that justify longer terms, they will be removed from the list of businesses that have signed up to the code.
What is the reason for the changes?
The changes are part of an ongoing programme designed to promote faster payments. The Small Business, Enterprise and Employment Bill will introduce tougher reporting laws, forcing larger companies to publish their payment terms as a way of increasing transparency and putting pressure on them to adopt better practices that are more helpful to smaller businesses.
The PPC sets out the kind of fair and reasonable practices that businesses should follow when dealing with suppliers, such as paying invoices on time and communicating effectively if problems arise. The code is voluntary, but by signing up to it, firms gain the benefit of reassuring their suppliers that they will be treated fairly and paid on time.
How can Berry Smith help?
Berry Smith advises many businesses on the recovery of business debts, which can on occasion be related to debt recovery disputes that delays or seeks to avoid payment.
If you would like more information about the issues raised in this article or any aspect of business debt recovery or disputes please contact firstname.lastname@example.org. Our solicitors and legal team, based in Cardiff, have wide experience in dispute resolution throughout Wales and the UK.