The UK government has introduced a new late payment law, the toughest crackdown on overdue invoices in a generation. For small businesses, this reform could be transformative. Late payments have long strangled cashflow, stalled growth, and forced owners to spend hours chasing invoices. The impact is huge: an estimated £11 billion lost to the UK economy each year, with 50,000 businesses closing annually because of poor payment practices.
Now, with stricter rules and tougher penalties, the late payment culture is set to change.
New UK Late Payment Law: What’s Changing
The new legislation introduces sweeping reforms designed to protect small businesses and ensure suppliers are paid fairly and on time.
Here’s what’s coming:
- Maximum payment terms of 60 days (set to reduce further to 45 days after a transition period).
- A strict 30-day invoice verification deadline – businesses must confirm or dispute invoices within a month.
- New enforcement powers for the Small Business Commissioner, including multi-million-pound fines and spot checks on late-payers.
- Board-level accountability – large companies must review payment practices at audit committee level and disclose supplier payment performance.
- Mandatory interest charges on late invoices, making late payment a costly choice.
The message is clear: it’s time to pay up.
Why the Late Payment Crackdown Matters for Small Businesses
For SMEs, this represents more than just red tape. It’s a much-needed culture shift in business.
- More predictable cashflow
- Reduced time wasted chasing overdue invoices
- Stronger recourse against late-paying clients
- A fairer business environment where payment discipline is enforced
Put simply, these measures could give small businesses the breathing space they need to invest, grow, and thrive.
How Talbots Collect Can Help You Recover Debts
While the legislation is a big step forward, businesses still need practical solutions for recovering outstanding debts today.
That’s where Talbots Collect comes in.
- Fast, effective recovery: We act swiftly to recover outstanding debts, so you can focus on running your business.
- Proven results: Our team achieves an 83.3% success rate at the pre-action stage, meaning most debts are resolved without the need for court proceedings.
- Legal expertise: As part of Talbots Law, our debt recovery team combines commercial insight with legal precision.
- Transparent pricing: No hidden fees. Just clear, professional service.
- Tailored support: We understand the pressures SMEs face—and we fight to protect your cashflow.
With the government now cracking down harder than ever on late payments, there has never been a better moment to protect your cashflow and put the right processes in place.
Protecting Your Business from Late Payments
Small businesses make up 99% of UK firms, employ 60% of the workforce, and generate £2.8 trillion in turnover. Talbots Law is proud to stand with them.
As the government rolls out its Small Business Plan, including a £4bn finance boost and stronger protections for suppliers, we’re here to ensure you get paid on time, every time.
Our debt recovery experts are here to support you every step of the way. Speak with a member of our team today.
Disclaimer
This blog was written by Tessa Rhodes, Associate & Debt Recovery Manager, in our Dispute Resolution Team. The contents of this blog or any other published by Talbots Law cannot be considered as legal advice. You should take no action without prior consultation with a qualified solicitor or legal professional. The contents of this blog refers to the process in England and Wales.