In this Solutions update, Dispute experts, Adele Whaley and Jayne Smith outline the new measures proposed by the government to tackle the late payment of commercial invoices in the UK in its upcoming “Prompt Payment and Cash Flow Review” (due to be published shortly). Adele and Jayne originally wrote about this review back in February 2023, see the article here.
They also provide an important overview of a new regulation intended to combat late payment in commercial transactions for member state countries within the EU. Whilst the new regulation will not directly apply in the UK, it will impact UK businesses contracting with EU entities.
An overview of the measures outlined by the UK government on 2 October 2023:
The government hopes these measures will foster a stronger culture of paying on time and provide businesses with more predictable and reliable cash flow. In turn, it is intended that this will provide an opportunity to increase investment and productivity across the economy, as well as bringing growth to the economy. Small Business Minister, Kevin Hollinrake has commented that: “SMEs that are paid on time can do more business, scale up and make more profits; delivering growth for the economy.”
Changes to EU law
The above measures announced in the UK also follow the European Commission’s announcement on 12 September 2023, of a new regulation to combat late payments in commercial transactions. The proposed regulation would replace the existing Late Payment Directive (2011/7/EU). Its proposals include:
The regulation needs to be adopted by the European Parliament and Council and will, if implemented in its current form, apply one year after becoming law. It represents a significant departure from the current directive and could impact UK businesses contracting with EU entities, especially if contracts are formed on the basis of the EU entities’ terms and conditions.
Our Disputes team is highly experienced in advising SMEs about late payment issues, either as a creditor or debtor, including internationally. If you need help, please get in touch.
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