UK Firms Face Fines for Late Invoice Payments

UK businesses that fail to pay invoices on time could soon face multi-million-pound fines, as part of new legislation aimed at tackling late invoice payments UK-wide. The government’s proposals are designed to protect small suppliers, improve cash flow, and reduce the economic damage caused by delayed payments.

Stronger Enforcement Powers for the Small Business

The Small Business Commissioner (SBC) will be granted new powers to:

• Conduct spot checks on large firms
• Enforce a 30-day invoice verification period
• Impose significant fines on repeat offenders

These changes aim to create a more accountable payment culture across UK businesses.

Mandatory Payment Terms and Interest Charges

The legislation will introduce:

• A maximum payment term of 60 days, reducing to 45 days
• Mandatory interest charges for late payments

These measures are designed to give suppliers greater certainty and reduce the time spent chasing overdue invoices.

Economic Impact of Late Payments

Late payments cost the UK economy £11 billion annually and lead to the closure of 38 businesses every day, according to government estimates. These reforms aim to reverse that trend and support small business growth.

Support from the Federation of Small Businesses

Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB), welcomed the reforms, calling them “bold and ambitious” steps toward ending the scourge of late payments.

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