UK’s new ‘Fair Payment Code’ aims to get subcontractors paid on time

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The new Code replaces the similarly named “Prompt Payment Code”.

It comes in response to figures that show that 15% of small- and medium-sized businesses cited cash flow and late payments as an obstacle to running their business in 2023, according to the Small Business Commissioner.

Under the new scheme, businesses can apply to be categorised under one of three tiers:

• Gold Award – for those firms paying at least 95% of all invoices within 30 days
• Silver Award – for those paying at least 95% of all invoices within 60 days, including at least 95% of invoices to small businesses within 30 days
• Bronze Award – for those paying at least 95% of all invoices within 60 days

In addition, every business granted an Award agrees to abide by the Code’s principles of being Clear, Fair and Collaborative with their suppliers.

It will also support businesses which wish to improve payment practices and helping them move up from Bronze to Silver, and to Gold over time.

Liz Barclay, Small Business Commissioner said: “We want suppliers paid within 30 days with payment beyond the due date a rare event. We want longer contractual payment term to be recognised as potentially detrimental to vital supply chains. We want businesses of all sizes to commit to fair and quick payments and to avoid harmful disputes. This new Code will drive a better payments culture and benefit everyone.”