A look at the proposed Small Business Commissioner and Late Payments Act 2020.

5th February 2020.

James Salmon, Operations Director.

We previously wrote on this blog about Lord Mendelsohn’s private members bill -Small Business Commissioner and Late Payments – and his proposals  to crack down on late payments.

Previous post – new bill introduced to tackle late payment

Below is a link to text of the bill at it’s first reading.

link to bill read in house of lords.

We wanted to take a deeper dive look at what was written in the bill.

The Small Business Commissioner and Late Payments etc Bill aims to address the problem of late payments experienced by small and medium-sized enterprises (SMEs). It seeks to introduce a framework to ensure that large businesses and public authorities pay their SME suppliers on time.

The Bill seeks to do this by strengthening the powers of the Small Business Commissioner (SBC) to enforce a new uniform 30-day statutory limit for payment of invoices, underpinned by financial penalties for persistent late payment or non-compliance by large businesses and public authorities.

The Bill further introduces a statutory time limit for resolving payment disputes and a duty on auditors to publish late payment data, requires the use of Project Bank Accounts for construction projects, and prohibits specified predatory payment practices including ‘onboarding’ charges, ‘pay-to-stay’ charges and ‘prompt payment discounts’.

The Bill is written to make provision to amend the statutory limits for payment of invoices; make provision for a statutory time limit for resolving payment disputes; amend interest for late payments and penalties for persistent late payments and noncompliance; prohibit specified payment practices, on-boarding and pay-to-stay; require payments becoming due under public sector construction projects to be held in project bank accounts; amend the remit, role and powers of the Small Business Commissioner in regard to late payments; provide for a duty on auditors to publish late payment data; and for connected purposes.


Part 1 looks to amend the late payments of commercial debts (interest) Act 1998.

This looking to reduce the maximum statutory credit terms from 60 days to 30 days . Clause 2 introduces a statutory limit of 30 days for the payment of invoices by all businesses, matching the requirement on public authorities.

“Payment” is defined as the point at which the payee is in receipt of cleared funds”.

Clause 3 introduces a 30-day limit on resolution of payment disputes, extendable only by mutual agreement. It requires purchasers to notify suppliers of a dispute within a 21-day verification period beginning on the day the service was fulfilled or the day the invoice was submitted, whichever is later. If a resolution is not agreed within the 30-day resolution period, either party may complain to the SBC.

This Clause also includes a provision to amend the Housing Grants, Construction and Regeneration Act 1996 to ensure that disputes in the construction industry may also be referred to the SBC.

Clause 4 introduces a duty on large company purchasers to pay statutory interest and compensation automatically at the point of paying a late invoice regardless of whether or not the supplier has asked for the compensation and interest. This replaces the current entitlement for suppliers to claim interest and compensation, which is not always used

Clause 4(4) increases the interest rate to 50% in cases where non-payment has exceeded 60 days or when required interest was not paid at the time of invoice payment.

Clause 5  defines a substantial remedy as follows:  A substantial remedy cannot be less than an amount that is the lower of— (a) the interest rate applied by the purchaser to its own customers, or
(b) the purchaser’s blended cost of finance as reported in its statutory accounts plus 4%.”



Part 2 looks to amend the Enterprise Act 2016 to expand the remit of the Small Business Commissioner (SBC)

Clause 7 expands the remit of the SBC to include public contracting authorities and construction businesses.

Clause 7(2) places a duty on the Secretary of State to ensure by regulations that construction operations should be included within the remit of the SBC.

Clause 7(8) removes the voluntary nature of the current cooperation with the SBC’s investigations.

Clause 7 also introduces a power for the SBC to impose penalty notices on larger businesses or public contracting authorities for persistent late payment, non- compliance, mis-reporting of payment performance data, or failure to provide information or documents requested by the SBC as part of their investigations.

Clause 8 sets the maximum financial penalty for large businesses at £10,000,000 or 4% of annual worldwide turnover, whichever is higher (matching the fines introduced in the Data Protection Act 2018). The maximum penalty for public contracting authorities is £1,000,000.

Clause 9 provides a responsibility for the SBC to collect and publish payment performance data by both large businesses and public contracting authorities at the end of each financial year.

Clause 10 provides for the banning of unfair payment practices which negatively impact SMEs namely:
a. ‘Prompt payment discounts’ whereby purchasers demand discounts for early payment of invoices;
b. ‘Onboarding’ whereby purchasers impose charges for becoming a supplier;
c. ‘Pay-to-stay’ practices whereby purchasers impose charges on suppliers to maintain their supplier status;
d. Contractual clauses that preclude suppliers from ceasing work or placing works on hold for non-payment.


This part gives Auditors the duty to report on payment performance

Clause 11 introduces a duty on auditors to report on the accuracy of late payment data reported by their client. It further makes auditors liable for any misreporting or non-compliance with the duty to report by their clients.

Clause 12 widens the data that public contracting authorities must publish under the terms of the Public Contracts Regulations 2015, to include their annual compensation liability and the total number of invoices not paid on time.


This part introduces project bank accounts in the construction sector.

Clause 13 requires public contracting authorities to establish Project Bank Accounts (PBAs) where they are involved in construction operations in excess of £500,000. PBAs would ensure that all monies would be held in a separate account so that all contractors in the supply chain have their payments protected in the event of a Tier 1 insolvency. This means that a contractor’s insolvency practitioner will not be able to have access to the funds in the PBA.


Prt 5 sets out the jurisdiction, timetable for coming into force and  suggests a name for the act “Small Business Commissioner and Late Payments Act 2020”
etc Act 2020.

Ready to speak to an advisor?

For help or advice on credit management, entirely without obligation.

Call us today

0330 053 9263

CPA is passionate about late payment

The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.

We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.

If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.

As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.

Under little used legislation, you are entitled to compensation for those late payments.

Now you can boost your own cash-flow.

CPA can help unearth the those hidden treasures.

We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.

Yes, CPA can help you boost your business cash-flow.

Don’t let your bankers control you, contact CPA today.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

Read our blog here on how to crack down on the late payment culture.

Read our blog here on how to give late payers the slap they need.

The “Why” of the late payment culture.

New PM should walk the walk and back small firms over late payments

Paying late is “crack cocaine” to big business.

Late payment culture risks “spiraling out of control”

visit our late payment compensation page

See our full blog and FAQ on late payment compensation

Do you realise you could be sitting on a fortune?

Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.

If you sold B2B on credit then there may be a hidden source of capital you can call on.

If you fancy an bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.

Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.

We can help you uncover the pile of gold, you didn’t even know you were sitting on.

If you trade with other businesses and were often paid late then you could be entitled to significant compensation.

Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.

Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.

You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.

That compensation could provide the cash boost your business needed.

But don’t delay, that compensation evaporates if not claimed within six years of the late payment.

How can CPA help?

CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.

We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.

Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.

CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.

The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit.  You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.

We do the work, you receive the cash.

If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.

We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.

We are helping business owners  who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.

Those former clients who regularly paid you late can finally be made to pay.

Ready to speak to an advisor?

For help or advice on credit management, entirely without obligation.

Call us today

0330 053 9263

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

Do you sell on credit?

With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.

Those customers will look for the easiest option  to boost their cash-flow. Don’t let it be you.

You can’t just assume your customers can and will pay you eventually, no matter how big their name is.

It is essential to have credit management systems in place to monitor and check your customers credit worthiness.

It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.

About CPA

The Credit Protection Association can help!

Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.

At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.

We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.

Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.

If you supply on credit, help us help you identify the risks.

Why use a third party collector?

As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When your customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.

Over the years we have collected billions in overdue invoices for our customers.

Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.

You might be hesitant about contacting a debt collection agency. What are they going to be like?

Can they help your particular type of business?

There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.

Debt collection agencies are not all alike.

Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and  has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain
the best possible relationship with customers!

At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.

The Credit Protection Association has helped has assisted tens of thousands of UK businesses with their credit control requirements, since the First World War.

We are polite, firm and efficient when it comes to recovering outstanding debt.

“We have used CPA for a number of years now. The website is easy to navigate around with lots of helpful reports. The staff are always at hand and very friendly. CPA has  helped us reduce our debt over the years and keep track of potential issues with our customers.”
~ CPA client in Buckinghamshire

“The service from CPA has proved to be everything that you said it would be. We have already seen a huge benefit. We have had a number of overdue accounts paid promptly and directly to us. It is also a huge weight off our mind to know that once we have passed an overdue payment over to you, you take care of everything whilst keeping us informed.
~ Credit Controller client in Warrington

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

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See all our latest news here!

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections