If you’ve ever spent weeks (or months!) chasing a client for payment, this one’s for you. The UK government has announced plans to crack down hard on late payments to small businesses and it could mean faster cash coming into your bank account.
Here’s what’s changing, why it matters and what to do about it.
The problem: Big firms are taking too long to pay
- Many small businesses are waiting 60, 90, even 120 days to get paid — which kills cash flow.
- The government wants to force larger companies to pay within 60 days, and eventually bring that down to 45 days.
- Late payers could soon face penalties, fines, and investigations from the Small Business Commissioner.
The main proposals
- 60-day payment limit (moving to 45 days later) – long payment terms could be banned.
- Mandatory interest on late payments – you’ll automatically be owed interest if you’re paid late.
- 30-day dispute rule – customers will only have 30 days to raise a valid dispute, stopping them from using “invoice queries” as an excuse.
- Bigger powers for the Small Business Commissioner – they’ll be able to fine and name-and-shame repeat offenders.
- Public reporting – large companies will have to publish how quickly they pay suppliers.
So if you run a small or medium sized business, you will know how stressful waiting to be paid can be. These new rules could make a real difference meaning more predictable cash flow, fewer awkward payment chases and a fairer balance of power between small suppliers and big companies. You’ll have stronger rights to charge interest and enforce payment terms, and customers will have less room to delay or dispute invoices unfairly.
The flip side is that you’ll need to keep your paperwork tight. Clear invoices, prompt follow-ups and quick responses to any queries but in the long run, it should make your business life smoother and less stressful.
Here’s a quick action list:
- Check your contracts – do any customers still have 90-day terms? That won’t fly much longer.
- Review your invoicing process – make sure invoices go out promptly and are easy to understand.
- Set up reminders – use your accounting software or calendar to chase payments before they’re overdue.
- Decide on an interest policy – will you charge it automatically or only when needed?
- Handle disputes quickly – aim to resolve any invoice issues within 30 days.
- Keep good records – dates sent, due, disputed, and paid — you might need to show them.
These new rules are still under consultation (the government’s feedback deadline is 23 October 2025) but they’re likely to happen.
Start tightening up your systems now. Even simple steps like clearer invoicing and faster follow-up can make a big difference to your cash flow. Speak to our friendly Glasgow team here if you need a guiding hand.