UK Plans Toughest Late Payment Laws in G7 to Support Small Businesses

The UK government has unveiled a landmark package of reforms aimed at tackling late payments to small and medium enterprises (SMEs), which cost the economy £11 billion annually and cause 38 business closures daily. Central to the reforms is the introduction of legally binding maximum payment terms starting at 60 days and reducing to 45 days, positioning the UK as having the toughest late payment laws among G7 nations. The Small Business Commissioner will receive enhanced enforcement powers, including the ability to conduct spot checks, impose multi-million-pound fines on persistent late payers, and enforce a 30-day invoice verification period to expedite dispute resolutions. Audit committees will be legally mandated to scrutinize payment practices at the board level, increasing accountability for large firms in their treatment of small suppliers. The government emphasizes that these measures will provide small businesses with greater financial stability and cash flow certainty, allowing them to focus on growth rather than chasing payments. While industry leaders acknowledge the boldness of these reforms, there is a shared call for effective enforcement to ensure meaningful change for SMEs.