Background and Summary Power to invalidate terms of contracts prohibiting etc. assignment of receivables and UK businesses: duty to publish report on payment practices
5.On 7 December 2013, the Government published the “Late payment of finance: building a responsible payment culture” discussion paper, a consultation on which ran until 31 January 2014. The paper proposed a number of possible measures that could be introduced to prevent or discourage companies from paying their suppliers late or imposing unreasonably long payment terms on them – a problem that is estimated to adversely impact on 85% of small businesses. The paper also called for views on what could be done to improve public procurement processes and make alternative financing options, such as factoring and invoice financing, more accessible for small businesses.
6.In May 2014, the Government published a response document, which provided a summary of replies received to the discussion paper and outlined the Government’s proposed actions. These include a combination of legislative measures and collaborative work to be carried out with industry and stakeholders, including the Chartered Institute of Credit Management, designed to increase transparency over companies’ payment terms and encourage companies to commit to reducing these where excessive and/or unfair. The response document also sets out the Government’s intention to address contractual barriers that can make it more difficult for small businesses to raise finance using their receivables.
7.This Part contains provisions which: