Reforms to the Prompt Payment Code covering small businesses come into force 1st July 2021 today requiring payment times to be cut from 60 days to 30 days.
Under the tightening of the rules, firms will need to demonstrate they have paid 95% of invoices from businesses with fewer than 50 employees within 30 days.
Signatory contractors do not have to take into account any labour-only subcontractors the supply chain firm engages.
For larger firms, clients or main contractors are still required to pay 95% of invoices within 60 days, with the public sector held to 30 days.
As part of the fresh crackdown on late payment chief executives or finance directors are now required to personally sign the Code to ensure responsibility for payment practices is taken at the highest level.
Firms are also now required formally to acknowledge as a condition of signing the Code that suppliers can charge interest on late invoices.
While the PPC has not suspended any signatories during the coronavirus pandemic, it is expected to step up compliance enforcement from today