UK Action on Late Payments
The UK government has announced a late payment crackdown UK businesses need to be aware of, aimed at protecting small companies and improving cashflow across the economy. Late payments have long been a major issue for SMEs, often causing unnecessary financial pressure and, in some cases, forcing otherwise viable businesses to close.
The new measures form part of a wider Small Business Plan and represent the most significant reform of payment rules in over 25 years. For many small business owners, this crackdown could mark a meaningful shift in how quickly they are paid for their work.
What Is the Late Payment Crackdown in the UK?
The late payment crackdown UK government proposals focus on tightening payment rules for large businesses and improving enforcement where suppliers are paid late. The aim is to create fairer payment practices and reduce the power imbalance between large organisations and small suppliers.
Key proposals include:
- A maximum 60-day payment term for invoices, reducing to 45 days after a transition period
- Increased enforcement powers for the Small Business Commissioner
- Financial penalties for companies that repeatedly pay suppliers late
- Mandatory reporting on payment practices at board level
These changes are designed to discourage poor payment behaviour and give small businesses greater certainty over when they will be paid.
Why the Late Payment Crackdown Matters for UK Small Businesses
Late payments are one of the most common causes of cashflow problems for SMEs. Even profitable businesses can struggle if invoices are not paid on time, leading to difficulties covering tax bills, wages, and everyday operating costs.
By strengthening payment rules, the late payment crackdown UK small businesses face is intended to improve cashflow stability and reduce reliance on overdrafts, loans, or personal funds. Faster payments also allow business owners to plan more confidently and invest in growth.
How Businesses Can Prepare
While the crackdown primarily targets larger organisations, all businesses should ensure their invoicing and record-keeping processes are robust. Clear invoices, accurate records, and consistent follow-ups will remain essential, particularly as payment practices come under closer scrutiny.
At Sepera Accounting, we support clients with bookkeeping, cashflow management, and ensuring their financial systems are set up correctly. Good cashflow management starts with clear records and timely reporting, especially as regulations continue to evolve.
Good Morning Britain Coverage of the UK Late Payment Crackdown
For a clear overview of the government’s announcement and its impact on small businesses, this explainer provides helpful context.
Accounting Support for Late Payments & Cashflow
If late payments are affecting your cashflow, Sepera Accounting can help.
We support businesses with monitoring receivables, cashflow planning, and clear financial reporting. As a result, you can identify risks earlier and take informed action.
Consequently, you maintain financial stability and make decisions based on accurate, up-to-date figures.
Contact Details
To speak with our team:
+44 20 7071 8676
office@seperaaccounting.co.uk
Our accountants help businesses improve financial processes and reduce the impact of late payments as regulations continue to evolve.
