Late Payments Consultation

The Government’s ‘Backing your business: our plan for small and medium-sized business’ has been published to help start, grow and build resilience of small business. This plan includes legislating to end late payments which costs the UK economy £11bn per year and closes down 38 UK businesses every day.

To support this, the Department for Business and Trade have launched a consultation seeking views on proposed legislative measures to ensure companies pay their suppliers quickly and on time.

The proposed measures within the public consultation are:

  • To increase discussion and scrutiny of large companies’ payment practices at board level, including by exploring potential roles for audit committees or company boards.
  • Setting maximum payment terms to 60 days, removing the exemption that allows businesses to agree terms longer than 60 days.
  • Introducing a 30-day invoice verification period, so that businesses who wish to raise a dispute will need to do so within 30 days.
  • Providing the Small Business Commissioner with additional powers and responsibilities to investigate businesses, impose fines and make legally binding arbitration in their function in helping resolve payment disputes.
  • Giving the Small Business Commissioner responsibility for spot-checks to ensure accurate payment performance reporting by large businesses.
  • Fining large businesses that consistently pay their suppliers late.
  • Making interest for late payments mandatory, removing the option for businesses to negotiate lower compensation rates.
  • Introducing a new requirement for businesses to report how much statutory interest on late payments they pay their suppliers.
  • Following consultation, introducing one of two options related to the use of retention clauses in construction contracts: either prohibiting the use of retention clauses in construction contracts; or the introduction of requirements to protect retention funds deducted and withheld from insolvency and late or non-payment.

 

This consultation will run for 12 weeks and close at 11:59pm 23 October 2025. Further details can be found here.

Research looking at how late payments affect businesses has also been published.

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