By James Salmon, Operations Director, Tuesday 24th March 2026.

As briefly covered in this mornings news blog, the government has unveiled what it calls the “toughest crackdown on late payments in a generation.”

New legislation will:

• Cap payment terms at 60 days for large businesses
• Set a 30-day invoice “decision deadline” where customers must approve or dispute invoices within 30 days
• Give the Small Business Commissioner powers to investigate and fine offenders
• Require greater transparency at board level – companies must report on payment practices and audit committees must review payment behaviour.
• Reinforce the right to charge interest on overdue invoices. Late payment interest (currently 8% above base rate) becomes mandatory in contracts. Businesses won’t be able to “contract out” of it anymore.

On the surface, this looks like a major step forward for small businesses.

But the key question remains:

Will it actually result in SMEs getting paid faster?

What the new rules aim to fix

Late payment has long been one of the biggest threats to UK businesses.

Billions are tied up in unpaid invoices, and thousands of otherwise viable companies fail each year due to cashflow pressure rather than lack of profit.

The new measures are designed to:

• Stop large firms stretching payment terms beyond 60 days
• Deter late payment through fines and scrutiny
• Push responsibility for payment practices up to board level

There is no doubt that the intent is positive.

However, intent and impact are not always the same thing.

The enforcement question

A key part of the reform is giving the Small Business Commissioner (SBC) stronger powers.

In theory, this means:

• Investigations into poor payment practices
• Financial penalties for repeat offenders
• Greater accountability for large organisations

In practice, there is a challenge.

The SBC has historically been a small, advisory-led body, focused on mediation and guidance rather than enforcement. It has around a dozen staff. And there is no provision to increase its budget.

Scaling that into a regulator capable of policing thousands of large businesses is a significant step.

There is a risk that the law appears strong on paper, but is limited in how often it can be enforced.

Who benefits from the fines?

Another important detail is often overlooked.

When companies are fined for late payment:

• The money goes to the government
• Not to the supplier who has been kept waiting

For the SME:

• The invoice is still late
• The cashflow pressure still exists
• The administrative burden of chasing remains

A fine may punish the payer — but it does not directly compensate the business that has suffered.

We already have rights… but they are rarely used

This is not the first attempt to tackle late payment.

Under existing legislation, businesses are already entitled to:

• Fixed late payment compensation
• Interest at 8% above base rate

And yet, most businesses:

• Do not claim it
• Hesitate to enforce it
• Worry about damaging customer relationships

The reality is simple:

The tools already exist — but behaviour has not changed.

The real issue: visibility and accountability

One of the most interesting aspects of the new legislation is the focus on reporting and transparency.

Large businesses will be expected to:

• Disclose payment practices
• Bring payment behaviour into the boardroom
• Include greater detail in their reporting

This is a step in the right direction.

But it raises a bigger question.

What if late payment carried a direct financial visibility inside company accounts?

For example:

• Recognising potential late payment interest and compensation as liabilities
• Reflecting overdue supplier balances more prominently

Because:

What gets measured gets managed.

If late payment had a visible cost on the balance sheet, behaviour could change far more quickly than through fines alone.

See our blog detailing this:

You can legislate terms — but not urgency

At its core, late payment is not just a legal issue.

It is a behavioural one.

Large businesses often use suppliers as a source of working capital.
Payment terms are stretched.
Invoices are queried late.
Approvals are delayed.

And unless there is consistent follow-up:

Payment drifts.

The uncomfortable truth is:

You can legislate for payment terms — but you cannot legislate for urgency.

What this means for SMEs

The new rules are welcome.

They:

• Set clearer boundaries
• Increase pressure on poor payers
• Bring the issue into sharper focus

But they do not remove the need for strong credit management.

Businesses that get paid on time are not simply the beneficiaries of legislation.

They are the ones who:

• Set clear credit policies
• Invoice promptly and accurately
• Follow up consistently
• Challenge delays early
• Escalate when needed

The Hidden Cost: 133 Million Hours Lost

Late payment isn’t just about cash — it’s about time.

UK businesses are estimated to spend 133 million hours every year chasing overdue invoices. That’s management time, admin time, and energy that should be focused on running and growing the business.

And despite all that effort, many debts still age… and eventually turn into write-offs.

This is where process matters.

With a structured, consistent approach — and the support of CPA when needed — that burden can be reduced significantly.

Because chasing payment shouldn’t consume your business.

How CPA helps you stay in control

Legislation can support better payment culture.

But it does not replace the need for action.

At CPA, we help businesses take control of their cashflow by:

• Providing CreditCare reports so you know who you are trading with
• Monitoring customers for early warning signs
• Supporting overdue account recovery, with payments made directly to you
• Helping you maintain relationships while improving payment performance

Most importantly:

We help turn invoices into income — sooner.

Because in the end:

Cashflow is not protected by legislation alone.
It is protected by consistent, professional credit control.

Take control of your cashflow

If late payments are affecting your business, don’t wait for legislation to solve the problem.

Talk to CPA about how we can help you:

• Reduce overdue invoices
• Improve payment behaviour
• Protect your cashflow

Call 020 8846 0000 or email nsm@cpa.co.uk today.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections