Thu, 20 Sep 2012
A consultation on implementing European Union (EU) legislation to combat the problem of late payment to British businesses has been published today.

Implementing the EU Directive would create a level playing field for UK businesses trading with other businesses and public authorities in all member states, a statement from the Department for Business, Innovation and Skills (BIS) said.The main points in the EU Directive are:

• Public authorities will be required to pay suppliers within 30 calendar days of receipt of an undisputed invoice. (This matches the UK government’s standard practice for the public sector.)
• For business-to-business payments, the period for payment fixed in the contract should not exceed 60 days, unless otherwise expressly agreed, and provided such terms are not grossly unfair.
• It copies current UK practice of a default payment period of 30 days, where terms have not been agreed.
• There is a minimum €40 (£31) for compensation. (Current UK legislation sets three levels of compensation payment according to the value of the payment.) Suppliers will not be prevented from seeking to claim additional recovery costs.

According to the BIS statement, the government is already working alongside industry bodies in the UK to encourage more businesses to sign up to the Prompt Payment Code, which it says encourages good practice. Over 1,100 businesses have already signed up to the code.

The consultation will run until 19 October. Transposition of the EU late payment directive is intended to take place on 16 March 2013.