A North West accountancy firm Mitchell Charlesworth is urging property firms to be aware of looming changes to late payment law.

The company said that the Coalition government has announced it will fast-track adoption of the EU late payment directive – so that it can become a UK law in 2012, ahead of the EU 2013 deadline.

Mitchell Charlesworth partner David Darlington said the EU regulations set 30 days as standard terms for public and private sector organisations to pay invoices.

“This is very good news indeed for a lot of small firms managing tight cash flow,” he said. “For too long good businesses have been undermined - some fatally - by slow paying clients particularly big firms and the private sector. So we strongly urge firms to ensure they are fully aware of this legislation so they can actively enforce it as part of their credit control systems.”

Mr Darlington said the main points in the directive include public authorities having to pay suppliers within 30 days of being invoiced. He added that the directive introduces a cap on the maximum contractual payment period at 60 days, unless other terms are agreed.

Businesses will also be automatically entitled to claim interest on late payment and claim around £35 for recovery costs. The statutory interest rate will rise to at least 8 per cent, bringing it into line with the current UK standard.

In most cases payment terms beyond 60 days will be termed “grossly unfair” and hence unlawful.

Mr Darlington added: “Mitchell Charlesworth manages accounts for many SMEs across the region and there has long been a concern that larger companies are improving their cash flow at the expense of suppliers by delaying payment. Invoice management is a critical part of any business and it is essential that all business owners are clear on where they stand.

“In the past legislation added to late payment rules has been little used. The new limits which the directive introduces will help to clamp down on unfair payment terms and encourage a change in culture ensuring that paying late is simply unacceptable.”