Support Payontime

  1. Forum
  3. Pay on time supporter forums
  5. Late payment questions and answers
  7. Late Payers to Be Fined — But Will It Really Help the Victims?
× Post questions here about other issues concerning late payment.

Late Payers to Be Fined — But Will It Really Help the Victims?

More
2 days ago - 1 day 23 hours ago #5247 by james@cpa.co.uk
Late Payers to Be Fined — But Will It Really Help the Victims? was created by james@cpa.co.uk
Late Payers to Be Fined — But Will It Really Help the Victims?

James Salmon, Operations Director, 31st July 2025. 

The Prime Minister, Keir Starmer has announced new legislation to combat late payments, which cost the UK economy £11bn annually and lead to 38 business closures daily.

Small and medium sized firms employ 60% of the country’s workforce and generate £2.8 trillion in turnover.

However, for too long, the odds have been stacked against small businesses.From tradespeople and shopkeepers to start-up founders and family-run firms, too many work hard but don’t get the backing they deserve - held back by late payments and not getting the financial backing they need within a wider system that hasn’t worked in their favour.

The Government’s plan is to empower the Small Business Commissioner (SBC) to wield fines against the biggest firms who persistently choose to pay their suppliers late. What that actually  means beyond the soundbite has not yet been defined. The watchdog will also be able to carry out spot checks, verify claims and impose deadlines to clear a backlog of disputes.

In reality this looks like the Small Business Commissioner may make an example of a few high-profile large companies that are bad actors but will not have the resources to tackle the widespread scourge of late payments throughout the business world: It will have a negligible effect on the late payment culture and the use of credit.

Since the position of the Small Business Commissioner was established in 2016, it has been shown to be a little more than window dressing, giving the impression of supporting small business without actually taking much action. On the SBC website it has a banner trumpeting that they have recovered £8 million in late payments - but after nearly a decade, is that anything to be proud of? It’s not even a drop in the ocean of late payments, many of which come from the public sector in the first place.

Under the intended new rules, the SBC will be given powers to carry out spot checks and enforce a 30-day invoice verification period to speed up resolutions to disputes. The upcoming legislation says it will also introduce maximum payment terms of 60 days, reducing to 45 days, although existing legislation already sets maximum terms at 60 days and has a 30 days default. The eventual move from 60 to 45 days is welcome but when will it actually happen?

Sir Keir said: “From builders and electricians to freelance designers and manufacturers, too many hardworking people are being forced to spend precious hours chasing payments instead of doing what they do best, growing their businesses. It’s unfair, it’s exhausting and it’s holding Britain back. So, our message is clear: it’s time to pay up.”

The Prime Minister’s announcement of new powers to fine late-paying firms sounds like a bold step forward. However scratch the surface, and you’ll see a policy that looks more like headline-chasing than meaningful reform!

Maximum payment terms are already supposed to be 60 days under the Prompt Payment Code but this has done little to stop the widespread culture of paying late. Reducing the terms on paper doesn’t fix the real issue of enforcement.

Who benefits from the fines? Certainly, not the small businesses left out of pocket! Unbelievably the money goes into government coffers, not into the hands of the supplier who waited 90 days for payment, juggled bills, and possibly missed payroll. Is this intended legislation on late payments a subterfuge, and actually intended to make a dent in the country's deficit, or what?!

CPA agrees with the Prime Minister’s sentiments that late payments are holding business back, and we welcome actions that will actually lead to the reduction of late payments.  This announcement however, might sound good, but it is unlikely to accomplish much.

The point is the government does not need to insert itself into the relationship between customers and suppliers. It just needs to give suppliers the tools to motivate their customers to make payments on time and be compensated when they not.

CPA believe in better solutions:
  • Increase the late payment compensation and interest. The current levels of compensation and interest were set decades ago in. Increase the compensation in line with inflation to levels which will really deter would be late-payers. Paying suppliers late, should be made the most expensive way to boost their cash flow. Currently it’s the cheapest. It is in effect free!
  • Remove the barriers to collection. The right to late payment compensation needs to simplified and made stronger.  Its currently too easy to make excuses and fight the compensation. Stiffen the legislation and ease the enforcement of the payment of compensation.
  • Empower victims, not politicians. Redirect the system to support those actually harmed by late payment, not to fund government balance sheets.
CPA’s Late Payment Compensation (LPC) service is already doing just that — helping businesses claim what they’re owed for historic late payments going back six years. And our members benefit from proactive support that makes getting paid on time the norm, not the exception.

If the government is serious about ending the UK’s late payment culture, it must focus on practical enforcement and direct support for victims — not soundbites. Until then, CPA continues to lead the way.

Call us on ☎️020 8846 0000 or email 💻 This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it.

Please Log in or Create an account to join the conversation.

  1. Forum
  3. Pay on time supporter forums
  5. Late payment questions and answers
  7. Late Payers to Be Fined — But Will It Really Help the Victims?
Time to create page: 0.120 seconds