All founders know an invoice is just a piece of paper until the money actually hits your bank account, and late payments remain a growth killer for UK entrepreneurs. That’s why last week’s King’s Speech was such a landmark moment.
The government has officially announced a new bill to tackle the “scourge of late payments,” turning the proposals from earlier this year into law. This is a real, concrete commitment to create the strongest late payment framework in the G7.
What this means for your cashflow
For years, the Office of the Small Business Commissioner (OSBC) has used “soft power” to mediate disputes. While we’ve recovered millions, we’ve often been fighting with one hand tied behind our backs. Up until this point, we’ve had no formal investigative powers, which made it hard to compel change.
After this week, however, things will look very different. Larger companies will no longer be able to get away with treating smaller businesses like they’re worthless. In terms of cash flow, these new powers will mean small businesses get paid on time, and if they’re not, there will be speedy recourse available.
I first discussed my new, proposed powers in a column a few weeks ago, but here’s a recap of what has now been enshrined into law:
- A 60-day legal cap: Large firms will no longer be able to force small suppliers into 90 or 120-day terms.
- Mandatory 8% interest: No more “opting out” of interest clauses. If a payment is late, statutory interest, set at 8% above the Bank of England base rate, will be automatically required.
- Real teeth for the Commissioner: My office will soon have the power to investigate persistent offenders, adjudicate disputes out of court, and, most importantly, issue multi-million-pound fines.
- Boardroom accountability: Persistently late payers will have to publish explanations in their annual reports, putting the issue squarely on the desks of CEOs and CFOs.
Why this matters now
Every single day, 38 small businesses in the UK shut their doors because they haven’t been paid on time. We waste 86 hours a year just chasing what we’re already owed—time that should be spent innovating and growing.
When money flows faster through supply chains, the whole economy benefits. If we can accelerate small business growth by just 1%, it could deliver a £320 billion boost to the UK by 2030. Ensuring they’re paid on time is, of course, a huge part of that.
My advice: don’t wait for the law
While the Bill works its way through Parliament, you can take action today. Use our Interest Calculator to see what you’re owed, and if a large company is ignoring you, don’t keep chasing. Instead, reach out to us at the OSBC.
We are moving toward a world where paying small suppliers on time is a non-negotiable standard, not a “courtesy”. Let’s get that money moving.
Emma Jones advocates for SMEs in the UK, ensuring they receive the resources they need to grow. With a degree in Law and Japanese, Emma has spent the last 25 years founding and leading multiple ventures, including Enterprise Nation and StartUp Britain, before being appointed as the Small Business Commissioner for the Department for Business and Trade in June 2025.
This content is contributed by a guest author. Startups.co.uk / MVF does not endorse or take responsibility for any views, advice, analysis or claims made within this post.
