Time’s Up: Why Big Businesses Must Pay Small Suppliers Faster—and What You Should Do

At long last, the UK is taking late payments seriously. New reforms unveiled on 30 July 2025 under the Small Business Plan aim to make the payment landscape fairer for small firms. From new reporting rules for large companies, to shorter payment deadlines, enhanced enforcement powers, and tougher fines—this is billed as the toughest late‑payment crackdown in the G7.

What’s Changing – The Essentials

Payment terms go on a diet

Currently, many large firms take up to 60 days—or longer—to settle invoices. Under the new proposals, that term will be legally capped at 60 days, with a phased reduction to 45 days.

Big firms must come clean

Companies with over 250 employees will be required to disclose supplier payment performance in their annual reports. Their audit committees must now actively review and challenge payment practices at board level.

Stronger enforcement tools

The Small Business Commissioner will be granted new powers to conduct spot checks, enforce a 30‑day invoice dispute window, and investigate repeat offenders. Businesses paying more than 25% of invoices late within six months could face fines equal to double the unpaid statutory interest.

Why It Matters to Small Business Owners

• Late payments currently cost UK SMEs around £11 billion a year and contribute to approximately 38 business closures daily.
• The average late invoice runs to £6,000, and 61% of SMEs say payment delays damage cashflow or force them into overdrafts.
• For small businesses, every day wasted chasing payments is time stealing away from growth and sanity.

What You Need to Do Now (Beyond Eye-Rolling at the News)

Review your own payment terms

Even large customers could get hit if they delay paying you. Clear, reasonable terms—and sticking to them with your suppliers—is good business practice.

Track invoices closely

Keep a pulse on overdue payments—especially those from larger clients. If more than 25% of your invoices go unpaid past due within six months, small business commissioner fines could be triggered at the other end of the chain.

Share advice up and down the chain

If you have big-business clients, encourage them to get their reporting and board-level oversight in order. It protects them—and smooths payment flows for you.

Stay alert to consult & legislation

The payment reforms are still progressing through Parliament. Keep an eye on updates, especially around the final timing of reduced terms and enforcement rules.

These reforms may feel like “just more regulation,” but for small businesses, they represent real hope. The changes aim to shift the power back to fair contracts, prompt cash flow, and a business environment where you spend less time chasing invoices and more time running your business.