Late payments remain one of the biggest challenges facing small businesses. They drain cash flow, stunt growth and – according to government figures – are responsible for closing 38 UK businesses every single day.
To tackle this, the Department for Business and Trade has launched a new consultation on late payment practices, open until 23th October 2025. The proposals would amount to the most significant shake-up of payment legislation in over 25 years, aiming to give the UK the strongest framework on late payments in the G7.
Why This Matters
Over 1.5 million businesses are affected by poor payment practices. When invoices aren’t settled on time, small firms struggle to pay staff and suppliers and reinvest in their future. Healthy cash flow is the lifeblood of business – and this consultation is an opportunity for the business community to influence change.
Key Proposals on the Table
The consultation covers a wide package of measures, including:
- Capping payment terms at 60 days (with potential to reduce this to 45 days in future)
- A 30-day deadline for disputing invoices to prevent indefinite delays
- Mandatory statutory interest on late payments
- Financial penalties for persistent late payers, enforced by the Small Business Commissioner
- Stronger board-level oversight of large companies’ payment practices
- Tighter rules on construction contract retentions, protecting funds from late or non-payment
Your Chance to Shape the Rules
The government wants to hear directly from businesses of all sizes, as well as trade bodies and representative organisations. Responses will help shape the final package of reforms designed to create a fairer, faster payment culture across the UK. Share your views by completing the online survey today.
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