Businesses are to come under pressure to pay all invoices within 60 days after an European directive came into force over the weekend.
The late-payment directive goes even further for public sector organisations, which have to pay suppliers' invoices within 30 days – half the time given to private sector businesses.
The directive will also allow a supplier to levy interest charges of 7 per cent over the Bank of England base rate on late-paying customers.
The law addresses concerns that big business is taking advantage of relationships with suppliers by demanding payment terms and deadlines that effectively hand them an interest-free loan.
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