Tackling late payments: Enterprise Nation's response to the government consultation

Every founder has a story about a client who took months to pay. For some, that delay meant skipping wages or shelving plans for growth.

That's why the Department for Business and Trade (DBT) launched a consultation this autumn to tackle poor payment practices once and for all.

Enterprise Nation's response to the consultation drew on our members' insights and focused on the measures that would make the biggest difference to small firms' cash flow, confidence and ability to plan.

Here's what the government asked – and what we said in exchange.

Read the full submission from Enterprise Nation

1. Board-level accountability

The government asked whether large companies should have to comment publicly on their payment performance, and whether the Small Business Commissioner (SBC) should be able to contact their boards directly.

We said…

Yes (strongly!). Culture only changes when responsibility sits at the top. A short, standardised commentary in directors' reports would elevate late payment as a boardroom priority.

We also supported proportionate contact from the SBC to audit committees or boards, provided it's transparent and time-bound.

The Commissioner should publish when and why it writes, to avoid duplication and keep enforcement fair.

To make this workable, we suggested a one-page board narrative template applied even where companies don't have audit committees, and standardised definitions of "days to pay" to stop data being gamed.

2. A 60-day cap on payment terms

The government asked whether it should limit payment terms in the UK to a maximum of 60 days.

We said…

We agreed in principle. A cap would stop the worst abuses where large buyers impose extreme terms on small suppliers.

But our members told us certainty matters as much as speed. A reliable 90-day cycle can be better than an unpredictable 30-day one.

We warned that a cap on its own could make 60 days the new default and give firms that currently pay faster a reason to slow down.

So, we recommended a 60-day limit paired with clear anti-regression guidance, strong monitoring and a gradual move to 45 days once behaviour improves.

If exemptions are needed, they should be narrow and temporary – such as for seasonal sectors or escrow-backed project finance – and disclosed in company reports.

3. A 30-day window to dispute invoices

DBT asked whether to stop businesses disputing invoices after 30 days.

We said…

Yes, emphatically. This would end the common tactic of raising spurious disputes on the very day payment is due.

Small firms have told us how that practice wrecks cash flow and morale. A fixed 30-day window enforces discipline.

After that, payment should proceed and any later disagreement handled through alternative dispute resolution (ADR), a practical "pay-now, claim-later" model that protects relationships while preventing deliberate delays.

To support this, we urged government to encourage digital tools that reduce disputes in the first place.

That includes mandatory dispute-reason codes, purchase-order matching and automated reminders to flag verification issues earlier.

4. Making statutory interest automatic

The government proposed applying statutory interest to late payments as an automatic requirement of all qualifying contracts.

We said…

We agreed in part. Making interest automatic sends a strong signal that late payment has a price. But many small suppliers still hesitate to charge it, fearing it might damage relationships.

Our solution was automation. Statutory interest should be auto-calculated and displayed on statements, with suppliers free to waive it once paid. That preserves goodwill while enforcing discipline.

We also said this measure should be tied to transparent reporting of interest owed versus paid, and proportionate penalties for repeat offenders.

5. Reporting on interest owed and paid

The government proposed that large firms report how much statutory interest they owe and actually pay.

We said…

Yes, strongly. This is one of the simplest and most effective ways to expose poor payment behaviour.

Publishing an "interest owed vs paid" figure in the existing Payment Practices and Performance Reporting framework would turn data into accountability.

We recommended clear, auditable definitions for how this interest is calculated, with the SBC having the power to verify figures.

A short board commentary explaining how interest exposure is managed would add further pressure to improve.

6. Financial penalties for persistent late-payers

DBT asked whether firms that consistently pay late should face financial penalties linked to unpaid statutory interest.

We said..

Yes, with caveats. Penalties only work if they bite. If fines are small or hidden, large companies will just treat them as a cost of doing business.

We called for a tiered penalty system tied to the scale and recurrence of unpaid interest, with:

• published decisions

• time-bound improvement plans

• for repeat offenders, even being excluded from procurement opportunities

To keep it fair, penalties should account for sector norms and avoid hitting firms mid-reform. The goal is cultural change, not punishment for its own sake.

7. Stronger powers for the Small Business Commissioner

DBT asked whether the SBC should be given stronger powers to enforce compliance.

We said…

Yes, unequivocally. The SBC must be able to demand information, verify data and launch investigations. The current set-up relies too heavily on voluntary disclosures, which means there's little real deterrent.

Our members said they often avoid complaining for fear of damaging relationships or because outcomes are weak.

Giving the Commissioner greater authority, backed by confidentiality and anti-retaliation protections, would change that.

To avoid confusion or duplication, we recommended clear case-handling standards and memoranda of understanding between the SBC and other regulators.

8. Keeping reporting twice a year

Finally, the government asked whether large businesses should report their payment data once a year instead of twice.

We said…

No. Reducing the frequency would weaken transparency and make it harder for suppliers to assess payment performance in real time.

We suggested a hybrid approach: one full annual report plus a lighter mid-year "snapshot" to maintain visibility while reducing burden.

Our five priorities for reform

We closed our submission with five priorities drawn from what founders told us matters most:

1. Predictability over speed: A 60-day cap helps, but anti-regression guidance is needed to stop faster payers sliding back.

2. Meaningful transparency: Report interest owed and paid, keep mid-year data and publish what action the SBC has taken.

3. Targeted enforcement: Tie penalties to unpaid interest and require improvement plans.

4. Practical dispute rules: 30-day verification windows and "pay-now, claim-later" models to curb abuse.

5. Digital fixes for small firms: Promote e-invoicing, purchase order matching and auto-interest tools to cut the amount time spent chasing payment.

What happens next

The consultation closed on 23 October 2025. The government is expected to respond early next year.

Enterprise Nation will continue working with DBT, the Small Business Commissioner and industry partners to make sure the final package delivers real change.

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