Changes to late payment law will benefit small fi rms managing tight cash flow, according to accountants.
The Government recently announced that it was going to fast-track adoption of the EU late payment directive so that it can become law in 2012, ahead of the 2013 deadline.
When the legislation comes into force, public and private sector organisations will have 30 days to pay invoices.
Businesses will then automatically be entitled to claim interest on late payment and claim about £35 for recovery costs. The statutory interest rate will rise to at least eight per cent, bringing it into line with the current UK standard.
In most cases payment terms beyond 60 days will be deemed “grossly unfair” and therefore unlawful.