The latest exclusive article for SMEWeb from Small Business Commissioner Emma Jones CBE looks at recent government announcements on tackling late payment of invoices. Emma runs the independent public body that tackles late payments and unfair payment practices.
Last week was a big week for small firms. The government published its response to the late payment consultation and, in the words of one analyst, “came out swinging”.
Let’s first rewind a little. In July 2025, the prime minister unveiled a Small Business Plan for the UK, including an announcement that the Department for Business and Trade would consult on nine measures aimed at speeding up payment terms and times. The consultation ran for 12 weeks and received a record 800+ responses. Many discussions were had with companies, large and small, on the proposals.
What was announced last week was an intent to move proposals into law. There are some meaty measures being taken forward including moving the UK to a country where 60 day payment terms are the maximum allowed ie no more expectation that small firms will sign contracts with 90 or 120 day payment terms without complaint.
In the new world, should invoices be paid late a mandatory 8% interest over base rate will be automatically applied and expect to be paid. I am keen that small businesses know this can be applied (from the date it comes into legal effect) and feel confident to apply it, but the Office of the Small Business Commissioner will also be reviewing data on payment performance and contacting companies where data shows interest is owed.
Speaking of the Office, it will also gain new powers to investigate businesses that are not paying on time, with intelligence sourced from public data and from small firms who contact the Office with cases and complaints. A new development means that investigations can be carried out in anonymous fashion and not needing to name the complainant.
These measures now need to be drafted in a Bill that then makes its passage through Parliament. This can take time. But what is now clear is the government’s; intent and direction of travel so as anyone knows who runs an efficient business, it’s good to be prepared.
As a small business, I would advise you to follow the Bill – we will be producing regular updates on its progress – understand how your rights are changing, and start to have conversations with your large clients on how they themselves are preparing. Are they signed up to the Fair Payment Code? Are they reviewing contracts and payment processes in order to comply with any new payment terms and automatic interest application?
I know first hand how chasing late invoices can impact cashflow and productivity. If we get this right, hours will be freed so rather than trying to secure money for products and services delivered, you can instead spend hours on going for growth. Let’s get this Bill underway!
Other content by Emma Jones:
- Chasing late payments? How the Office of the Small Business Commissioner can help
- Focus on the Fair Payment Code and celebrating firms that pay on time
- Top tips to contract well and get paid on time
- Three things to expect from the Office of the Small Business Commissioner in 2026
- Not getting paid on time? Call the Late Payments Line
- SME Safaris make payment and policy connections