Late payment in 2026: The year slow payers run out of road

If you run a small business, you already know late payment is damaging.

What's changed in the last year is that the issue of late payment has gone from "annoying constant" to "political flashpoint", with increasingly harder numbers and a much tougher mood when it comes to policy.

The government's own research now estimates that late payments cost the UK economy almost £11 billion a year.

They affect over 1.5 million businesses, with £26 billion owed at any one time and around 14,000 firms closing each year as a direct result. That's roughly 38 businesses a day.

New data from accounting and payments platforms tells the same story. Almost two-thirds of invoices UK small businesses sent in the past year were paid late, based on millions of invoices from over 200,000 FreeAgent customers.

At the same time, a GoCardless/FSB survey of over 2,000 small firms found that 45% are seeing more late payments than a year ago, and nearly a quarter receive payments up to 60 days late.

In other words, the late payment crisis is no longer anecdotal. It's quantified to death, and ministers now talk about it as a systemic threat to small businesses' growth and ability to survive.

Against that backdrop, here's what I expect to happen in 2026.

1. Boardrooms will be on the hook for payment culture

Through the Department for Business and Trade's (DBT) late payments consultation, the government has proposed forcing large companies to say more about payment practices in their statutory reports, including how much statutory interest they owe and how much they actually pay.

Ministers have already set out plans to require big firms to report their payment performance in their annual reports, with audit committees legally responsible for overseeing it.

That's very close to what Enterprise Nation argued for in our consultation response – short, standardised board-level commentaries and clear, comparable metrics, so late payment moves from "finance admin" to a standing governance issue.

My prediction

In 2026, you'll see more FTSE-level boards talking about payment terms in their annual reports and on investor calls, because they'll have to.

Serial late-payers will find that this becomes a stewardship and ESG issue, not just an operational gripe from suppliers.

2. 60 days will become the hard ceiling, 45 days the new norm

The government has already signalled that UK late payment rules will be "the toughest in the G7", with a maximum payment term of 60 days written into law and a planned reduction to 45 days after a transition period.

The consultation also floats a cap on payment terms, and our response backed this in principle, with two important conditions:

• It must be paired with anti-regression rules so firms that currently pay in 30 days aren't nudged to slow down to 60.

• There should be a clear path to 45 days as behaviour improves.

My prediction

By the end of 2026, 60-day terms will be seen as the absolute upper limit for larger buyers, not a starting point for negotiation.

For firms selling into the public sector, 30-day terms should be the default, and anything longer will be difficult to justify.

If you currently tolerate 90- or 120-day terms with large customers, this is the time to plan for that model to become less acceptable politically and reputationally.

3. "No pay, no play" will become more common in public contract

The new Procurement Policy Notes (PPNs) already give contracting authorities permission to exclude suppliers from major government tenders if they can't show decent payment performance.

Good performance, for example, might mean paying 95% of invoices within 60 days and keeping average payment days below a set threshold.

At the same time, the Small Business Plan and late payments package promise stronger remedies against large companies that persistently pay late, including powers for the Small Business Commissioner to impose significant fines and run spot checks on payment practices.

This is very close to the direction we called for in our submission:

• Tiered penalties tied to unpaid statutory interest

• Improvement plans for repeat offenders

• The option to restrict access to procurement opportunities where firms refuse to improve

My prediction

By 2026, if you're a large buyer with poor payment data, you'll be at risk of being disqualified from major public tenders.

"Don't pay, can't play" will move from a slogan in PPNs to an everyday procurement test.

For small suppliers, this is an opportunity. If you're already paying your own suppliers within 30 days and can show proof, that record will become a competitive advantage when partnering with primes on public contracts.

4. Gaming disputes will get harder

One of the most common stories we hear from members is the "day-29 dispute'" where a buyer raises a flimsy problem with an invoice on the day it falls due, purely to reset the clock.

The DBT consultation suggests a 30-day window for disputing invoices, after which payment must proceed and any remaining disagreement is handled through a "pay now, claim later" model.

My prediction

Once this is implemented, it'll be harder for buyers to hide behind vague or last-minute disputes.

If an invoice hasn't been queried within 30 days, it should be paid, with statutory interest rolling automatically if it isn't.

5. Late payment will become a reputational and regulatory risk, not just a cost

Reporting on payment practices and performance has already been extended to 2031 and beefed up, with new requirements to report on the value of invoices paid within 30 days, the value paid late and the proportion of invoices disputed.

On top of that, the government now proposes that large companies must report the total statutory interest they owe due to late payments, and how much of it they actually pay.

Campaign groups and the media are already mining this data.

• Good Business Pays' latest watchlists show record numbers of companies taking more than 80 or even 100 days to pay, and estimate that over £100 billion of invoices were paid late between January and September 2025 alone.

• National press coverage has started naming and shaming individual brands with extreme payment times.

My prediction

In 2026, payment performance will become a standard part of how journalists, campaigners, investors and even prospective employees judge "good" and "bad" companies.

The combination of richer reporting data, a more muscular Small Business Commissioner and clearer fining powers will turn late payment into a reputational risk in a way it's never been before.

For founders, this cuts both ways. You may gain leverage with bigger customers who fear being put on a watchlist, but you'll also need to keep your own house in order as you grow and take on your own suppliers.

6. More small firms will quietly walk away from poor payers

DBT's own research finds that 15% of affected businesses already avoid doing business with specific customers based on their payment behaviour. Given the scale of the problem and the new focus on data, that figure is likely to rise.

Platforms like FreeAgent, GoCardless and QuickBooks are starting to surface more analytics on payment times, sector by sector.

Combined with public reporting data, it's getting easier for founders to build their own "red list" of customers whose payment culture isn't worth the risk.

The point isn't to litigate every late invoice, but to give small firms enough information to choose their customers more selectively.

My prediction

Expect more founders in 2026 to make a conscious decision to walk away from bad payers, even when the headline contract value looks attractive, because the opportunity cost and stress no longer feel worth it.

In summary

Enterprise Nation will keep pushing for reforms that prioritise predictability over speed, meaningful transparency, targeted enforcement, practical rules around payment disputes and affordable digital tools for small firms.

As 2026 unfolds, late payment will still be a fact of life, but it's finally moving from something founders simply must put up with, to something governments, regulators and big boards are expected to fix.

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