Late payment legislation fails to speed up payment practices

Latest research by the Chartered Institute of Procurement & Supply (CIPS) has found that rules designed to force large companies to reveal how long they take to pay suppliers have failed to improve payment practices.

The duty to report legislation, introduced in 2017, has found that the average time it takes a large business to pay an invoice has fallen by just one day, to 36 days.

CIPS found that there has only been a “slight improvement” in the number of late payments over the past five years.

Official data shows that 31% of payments were late in 2018. The rate had fallen to 26% by 2022 and remains at that level this year.

Despite the duty to report being a legal requirement, the number of submissions has fallen every year since 2019, with 15,087 submissions in 2019 but only 12,829 last year.

Craig Beaumont, Chief of External Affairs at the Federation of Small Businesses, has called for Rishi Sunak to intervene, saying the Prime Minister “could have an impact, making membership of his Business Council contingent on signing the prompt payment code, to pay small suppliers within 30 days.”