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Late payment of bills has been a long-standing problem in the UK. Many businesses, especially smaller firms, have experienced problems where their customers delay payment for long periods. A particular complaint has been that the slow payers have often been much larger companies, deliberately delaying payment to smaller businesses.
This Act sets out to assist businesses faced with late payment problems. It does this by adding a number of rules to contracts between businesses.
It is important to realise that this legislation only applies to a commercial debt. It does not apply when one of the parties is not acting as a business, for example sales to a private individual/consumer.
The debt should be one that has arisen in the course of business. Both parties should be businesses, commercial entities or public sector organisations.