UK cracks down on late payments with sweeping new small business protections
A new bill targeting late payments to small businesses will be introduced in parliament on Tuesday. The Small Business Protections (Late Payments) Bill aims to tackle the growing crisis of delayed invoices, which left UK firms over £100 billion out of pocket last year alone. The legislation grants the Small Business Commissioner, Emma Jones, sweeping powers to investigate and penalise repeat offenders. Companies that persistently pay late could face fines running into tens of millions of pounds. Alongside fines, the bill enforces mandatory interest of 8 per cent above the Bank of England’s base rate on overdue invoices.
Payment terms will now be capped at 60 days for large firms settling bills with smaller suppliers. The bill also bans the use of ‘retentions’—withheld payments—in the construction sector, a practice that has long strained cashflow for smaller contractors. Poor payment practices currently drain an estimated £11 billion annually from the UK economy. Cashflow issues remain the biggest challenge for Britain’s 5.5 million small and medium-sized enterprises. If passed, the bill would give the UK the strongest legal framework on commercial payments among G7 nations.
The new measures seek to ease financial pressure on small businesses by enforcing stricter payment rules. With record levels of late payments reported last year, the bill’s success could depend on how effectively the commissioner enforces penalties. Firms failing to comply will face both financial penalties and public naming.
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