Prompt payment for UK firms across Europe

The UK was one of the first countries to introduce late payment legislation and is already seen as an exemplar across Europe. Implementing the EU Directive will therefore create a level playing field for UK businesses trading with other businesses and public authorities in all Member States.

Business and Enterprise Minister Michael Fallon said: “The UK already has some of the strongest late payment laws in Europe which are now being copied across Europe. This will give a real boost to UK business by providing them with the confidence and certainty they need to work with overseas suppliers.

“But legislation alone cannot deal with the issue of late payment. Businesses need to make sure they have suitable measures in place to help themselves. Tackling late payment will free up millions of pounds in the supply chain, helping to boost the economy and safeguard the future of thousands of UK companies.”

The main points in the EU Directive are that:

  • 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 (approximately £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.

The Government is already working alongside industry bodies in the UK to encourage more businesses to sign up to the Prompt Payment Code which encourages good practice. Over 1,100 businesses have already signed up to the Code.