Late Payers Face Tougher Corporate Reckoning

Britain is moving to tighten its response to late payment, with ministers preparing a tougher regime that would cap payment terms, impose automatic interest costs and strengthen enforcement against persistent offenders. The changes matter because they recast slow payment not as an administrative irritant, but as a drag on small-company survival, cash flow and wider economic activity.

Under the proposed framework, companies with annual revenue above £54 million would be required to pay suppliers within 60 days, replacing the longer terms that have often been imposed on smaller firms. Late payments would trigger statutory interest of 8 per cent above the Bank of England base rate, and companies would face a 30-day window for disputing invoices, a measure aimed at curbing weak or tactical challenges that delay settlement. Persistent offenders would also be required to explain payment delays and corrective action in their annual reports, pushing responsibility further into the boardroom.

The enforcement shift is equally significant. The Small Business Commissioner is set to gain expanded powers to investigate poor payment practices, adjudicate disputes and issue fines, with government backing these new responsibilities through additional funding and a cost-recovery model linked to penalties. Ministers have described the package as the toughest crackdown on late payment in more than a generation, reflecting the scale of a problem estimated to cost the UK economy around £11 billion a year and contribute to about 38 business closures each day.

For smaller firms, the reforms promise more leverage, but not a complete solution. Some business groups have welcomed the package while arguing that 60 days still risks becoming the accepted norm rather than a ceiling. There is also concern that payment problems involving smaller clients may remain outside the main scope of the changes. That leaves the reform agenda looking substantial, yet still dependent on whether enforcement, reporting pressure and commercial behaviour shift together rather than on legislation alone.