Late payments crackdown: The biggest reforms in a generation

The package announced is the largest set of late payment reforms in over 25 years.

It includes a 60-day cap on payment terms, mandatory interest on late payments, multi-million-pound fines for persistent offenders, and new board-level accountability for large firms with poor payment records. 

Cost to the UK

Affi Parvizi-Wayne, Enterprise Nation member and founder of Freda, said:

"I run a small eco-period care start-up, and I have actually stopped all sales to the retail sector because their payment terms would bankrupt me.

"My cash flow and stock availability are in a very fine balance, which means I need payment on purchase or immediately after to give the runway I need.

"Many retail outlets operate on either consignment or the most absurdly long payment terms, such as 90 days or longer."

Late payments cost the UK economy almost £11 billion a year. Around 38 businesses close every day because they are not paid on time. These reforms are designed to change that.

How our members shaped these reforms 

Enterprise Nation played a direct role in shaping this package. Last autumn, we submitted a detailed response to the Department for Business and Trade’s consultation on tackling late payments.

We also held a focus group with our members and the DBT consultation team, so the people who live with late payment every day could put their experiences directly to the officials designing the policy. 

The priorities our members raised, from payment term caps to stronger enforcement, are reflected in what the government has delivered. This is not just an Enterprise Nation win. It is a win for every founder who contributed. 

What we called for, and what was delivered:

• A 60-day cap on payment terms: We called for a hard cap to stop the worst abuses where large buyers impose extreme terms on small suppliers. The government has confirmed a 60-day cap on all large firms when paying smaller suppliers.  

• Mandatory statutory interest: We supported mandatory interest in principle, with a preference for auto-calculation to protect small suppliers who fear damaging relationships by charging it.
  
  The government has gone further: All commercial contracts will now include statutory interest at 8% above the Bank of England base rate. That removes the burden of asking. 

• Board-level accountability: We called for boards and audit committees to publish standardised commentaries on payment performance. The government has confirmed that boards or audit committees of persistently late-paying large companies must publish explanations for poor performance and the actions they are taking to fix it.  

• Stronger Small Business Commissioner powers: We said the SBC must be able to demand information, verify data, and launch investigations, backed by meaningful penalties. The government has confirmed sweeping new powers, including the ability to investigate poor payment practices, adjudicate disputes, and impose multi-million-pound fines on firms that persistently pay late. 

Thanks to government ambition and boldness, our predictions have been borne out. This announcement confirms the direction and goes further than many expected.

You can read our original predictions here.

Enterprise Nation's view

Daniel Woolf, head of policy and government relations at Enterprise Nation, said: 

“At a time when small business budgets are being squeezed from every direction, getting paid on time is a cash flow essential.

"We particularly welcome the requirement for boards and audit committees to explain poor payment performance publicly. That was a central ask in our submission.

"Late payment only changes when it becomes a governance issue, not just a finance one. 

"The detail will matter. We want to see anti-regression protections so businesses already paying in 30 days aren't nudged towards the new 60-day ceiling, a clear pathway to 45 days as behaviour improves, and the 30-day dispute verification window we proposed to stop buyers gaming the system." 

What happens next 

Enterprise Nation is ready to work with the government and the Small Business Commissioner to turn these reforms into faster payments and healthier cash flow for the businesses that need it most. 

If you want to read our full consultation response, you can find it here.

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• How tackling late payments can boost your cash flow

• How small business owners are dealing with late payment

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