The Prompt Payment Code, designed to help small businesses get paid on time, will be reformed to better support the supply chain, it has been announced.
The news comes as the Government launches a new survey to seek views and opinions on the potential changes to the code.
The Prompt Payment Code was first launched in 2008 in response to research showing that late payments were leading to the closure of some 50,000 UK small businesses every year.
More recently, statistics show that late payments almost doubled in 2019 to £23.4 billion.
And the situation has only worsened throughout the coronavirus pandemic. According to the latest payment statistics, three in five (62 per cent) small businesses have reported “late or frozen” payments since the beginning of March.
To help alleviate the crisis, large businesses were invited to sign up to the code and commit to paying 95 per cent of invoices within 60 days and work towards 30 days as normal practice.
The most recent figures now show that more than 2650 signatories have registered with the scheme.
Despite making good progress, the Government is now seeking views on how the Prompt Payment Code can be improved.
Commenting on the reforms, a Department for Business, Energy and Industrial Strategy spokesperson said: “Whilst we believe these remain important principles, we also believe that reform could improve the Code. We have set out some of the potential reforms (and their rationale) being explored below.
“This discussion will inform the thinking of Minister Paul Scully, who is responsible for the policy on the Code, and the Small Business Commissioner Philip King, whose office is responsible for administering the Code.”
Have you got a view on the Prompt Payment Code? To have your voice heard, take part in the survey on the potential reforms of the Prompt Payment Code, found here.
For help and advice dealing with late payments, please get in touch with our expert team today.