Big businesses have been told they must pay small suppliers within 30, rather than 60 days, under a strengthened Prompt Payment Code.
The Department for Business said the code, first introduced in 2008, needed to be bolstered to protect small firms as poor payment practices were “still rife” and threatened the viability of solid businesses as the country emerges from the COVID-19 pandemic.
The department also wants either the chief executive, finance chief or a director of a participating company made a personal commitment to the code.
Suren Thiru, Head of Economics at the BCC said: “With firms continuing to face major cash flow difficulties, and our research suggesting that late payments have risen during the pandemic, businesses will be encouraged by the launch of a reformed prompt payment code.
“The improved code must be the first step in creating a culture of prompt payment where affected firms feel confident to call out bad practices, government uses its convening power to tackle this issue in sectors where it is clear that problems exist, and where there is a clear focus on improving relationships between businesses to address the problem of late payment.”