TOUGH NEW LIMITS ON LATE PAYMENTS
The legislation introduces several“ hard” caps and requirements that will fundamentally alter commercial contracting:
Minister for Small Business and Economic Transformation, Blair McDougall, noted the personal toll of these delays:“ I know first-hand how difficult late payments can be, forcing you to decide if you can afford to keep a business running, pay employees or even buy Christmas presents for your children. That is why I’ m proud to be leading the charge on tackling a problem that has been left untouched for far too long.
“ These are genuinely game changing measures that will ensure no business, no employer, no family has to endure the immense strain of being left strapped for cash they have already earnt.”
• A 60-day maximum payment cap: All large firms will be legally barred from exceeding 60-day terms when paying smaller suppliers.
• Mandatory interest on all contracts: All commercial contracts must include statutory interest, set at 8 % above the Bank of England base rate.
• The ban on retentions: In the construction sector, the government is consulting on banning the withholding of retention payments. This is designed to prevent small firms from losing earned income due to upstream insolvency or non-payment.
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