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The Late Payment Reform: Strengthening UK Business Accountability Welcome to Debt Matters. Today, we are looking at a major UK government update on late payments and what it could mean for businesses, suppliers, and the wider debt collection landscape.
The Department for Business and Trade published its response to t
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Welcome to Debt Matters. Today, we are looking at a major UK government update on late payments and what it could mean for businesses, suppliers, and the wider debt collection landscape.
The Department for Business and Trade published its response to the late payment consultation on 24 March 2026. In that response, the government said late payments are estimated to cost the UK economy almost £11 billion a year, with around 14,000 businesses closing each year as a result. It also said businesses are owed an estimated £26 billion in late payments at any given time.
Some of the biggest proposals include:
stronger powers for the Small Business Commissionera maximum payment term of 60 days between businesses, with limited exemptionsa statutory deadline for disputing invoicescompensation where invoice disputes are raised too latestatutory interest at 8 percent above the Bank of England base ratemore reporting requirements for persistently late-paying large companies
Why this matters for businesses
One of the most significant proposed changes is the expansion of the Small Business Commissioner’s role. The Commissioner is expected to gain powers to investigate poor payment practices, adjudicate payment disputes outside the court process, and fine businesses that persistently pay suppliers late or fail to comply with the rules.
If these reforms go ahead, smaller businesses may have a more practical route to challenge non-payment without always having to rely on lengthy court action. Large companies with poor payment records could also face greater public and financial pressure to improve.
The 60-day payment rule
Another major proposal is the introduction of a maximum payment term of 60 days between businesses. The government said this is intended to make sure smaller businesses are paid within a maximum of 60 days.
It has also said it is not currently taking forward a reduction to 45 days, although that could be revisited in the future.
Invoice disputes and statutory interest
The response also sets out plans for a statutory deadline for disputing invoices. Under the proposal, if a business fails to raise a dispute within the time limit, it may have to pay compensation to the supplier.
Alongside that, the government wants all commercial contracts to include a right to statutory interest at 8 percent above the Bank of England base rate.
More transparency for late payers
There is also a transparency angle here. The government intends to require boards or audit committees of persistently late-paying large companies to publish commentary on why their payment performance is poor and what they are doing to improve it.
Large companies may also be required to report the interest they are liable to pay, and the amount actually paid.
What this means for debt collection
For the debt collection sector, this is an important story because it shows the policy direction very clearly.
Key points for the sector:
more focus on prevention, not just recoverygreater accountability for persistent late payerspotential changes in how overdue accounts are escalatedstronger support for smaller suppliers chasing paymentmore attention on payment culture across UK business
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Release Date: 26/03/2026, 10:00:00
