Overview

This bill aims to improve payment practices for small businesses in the UK by amending existing legislation and strengthening the role of the Small Business Commissioner. Key changes include reducing statutory payment times, introducing stricter penalties for late payments, and prohibiting certain unfair billing practices.

Description

The bill makes several key amendments to existing laws, primarily focusing on the Late Payment of Commercial Debts (Interest) Act 1998 and the Enterprise Act 2016.

Amendments to the Late Payment of Commercial Debts (Interest) Act 1998:

• Reduces the statutory limit for invoice payment from 60 to 30 days.
• Introduces a 21-day verification period for payment disputes and a 30-day resolution period.
• Increases interest rates for late payments by 50% if payment isn't made within 60 days of the agreed date.
• Defines a "substantial remedy" for late payments, ensuring it's at least as high as the purchaser's cost of finance +4%.

Amendments to the Enterprise Act 2016:

• Expands the remit of the Small Business Commissioner to include public contracting authorities and auditors.
• Grants the Commissioner the power to issue penalty notices (up to £10 million for businesses, £1 million for public authorities) for persistent late payments or non-compliance.
• Requires the Commissioner to publish ranked payment performance data annually.
• Prohibits certain practices such as demanding early payment discounts and imposing charges for invoice submission or supplier onboarding ("pay-to-stay").

Other Amendments:

• Amends the Companies Act 2006 to require auditors to report on companies' payment performance and potentially report non-compliance to the Small Business Commissioner.
• Amends the Public Contracts Regulations 2015 to require project bank accounts for public sector construction projects exceeding £500,000.

Government Spending

The bill is unlikely to directly increase government spending significantly. However, increased enforcement and potential penalties may lead to administrative costs for the government and the Small Business Commissioner's office. The exact figures are not specified in the bill text.

Groups Affected

• Small Businesses: Could benefit from faster payments, reduced disputes, and stronger protection against unfair practices.
• Large Businesses and Public Authorities: May face increased costs due to stricter payment deadlines, penalties for late payments, and potential legal challenges.
• Auditors: Will have increased reporting responsibilities regarding companies' payment performance.
• The Small Business Commissioner: Will have significantly expanded powers and responsibilities.

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