As of 1 July 2021, large firms signed up to the Prompt Payment Code will have to pay small businesses within 30 days. Failure to do so could result in the firm being suspended from the code.
Large businesses will have to pay 95% of invoices to firms with less than 50 employees within 30 days, and large firms are responsible for establishing whether or not a supplier falls into this small-business category.
The change tightens up the system that previously required large firms to pay 95% of all invoices within 60 days. Firms with more than 50 employees will still only need to be paid within that timeframe.
This is an important change as it will enable all types of self-employed people to receive payment within a reasonable time period of issuing an invoice for payment. It is important to note that the payment rule only applies to signatories to the Prompt Payment Code, and you can find a list of them here.