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Government Issues Proposal for Plans to Challenge Late Payment in Business.

Late payment in business

Following their discussion paper in February 2015, the Government have recently published their proposals of how they can challenge late payment in business.

There has been much talk about the Small Business Commissioner, the role of which will be to help small businesses avoid going to court to resolve payment disputes, with plans already set in motion in regards to this role.

However the Government has recognised that there will be occasions in which litigation will be necessary, stating that ‘the Government believes it is important that they [small businesses] have the range of options available to them to take against ‘grossly unfair’ payment terms and practices.’*

A selection of the proposals made to challenge late payment in business

  • The small business commissioner is one of the major factors the Government will use in tackling late payment
  • The propose to give power to representative bodies, who will challenge ‘grossly unfair’ contract terms and practices on behalf of small businesses
  • Organisations will nominate themselves to become these representative bodies, and will have the choice of whether to work with members or non-members of their organisation
  • It will be made easier for disputes surrounding contractual terms and practices to be taken to court; courts will also have the opportunity to decide which practices would be considered ‘grossly unfair’. The paper states that the case law created from these decisions will clarify the meaning of ‘grossly unfair’ in the long run.

As with the proposals for the Small Business Commissioner this paper outlines that the process of tackling late payment in business is heading in the right direction. However, we are still lacking detail over what powers representative bodies will have and what the recommended penalty for businesses paying late will be.

The issue of late payment presents a difficult challenge for the Government to assess and provide effective solutions, therefore we hope that the extensive research that is being carried out regarding the issue will result in a positive outcome for small, medium and large businesses alike.


*Challenging Grossly Unfair Terms and Practices

Take a look at our Disputed Invoice Management Toolkit for guidance on how your business can deal with disputes.