Big business told to pay bills in 30 days

Bosses of large businesses will have to personally make sure bills to suppliers are settled within a month, in a change to a government system aimed at relieving pressure on thousands of small businesses suffering amid the pandemic.

It comes as the Government strengthens its prompt payment code – which is voluntary though widely followed – so that 95pc of invoices from small firms are paid within 30 days by larger counterparts.

This reduces the deadline from 60 days, which will remain the time target for payments to suppliers that employ over 50 people.

As of July 1, company directors, chief executives and finance directors must personally sign the code to ensure responsibility for bills to be settled on time is taken at the top of organisations.

The crackdown marks an effort by Whitehall to further safeguard fair treatment and payment practices between organisations of any size in supply chains.

Almost 3,000 companies have signed the code, which was first established in December 2008, and a failure to abide by the new terms will see them kicked off the programme.

The Government is cracking down on a long-running problem of late payments, which has only been exacerbated as businesses are hit by the pandemic.

It comes as small organisations struggle with cash flow, with many lacking the financial resources a larger counterpart would have.

Officials estimate about £23bn of late invoices are owed to businesses across Britain, reported the FT.

Bosses will also have to acknowledge suppliers can charge interest on late invoices, and the code - overseen by the Office of the Small Business Commissioner on behalf of the business department - has allowed breaches to be investigated based on third-party information.

Companies are publicly named and shamed if they breach the rules, as health food chain Holland & Barrett was in 2019 for late payments.