Government cracks down on late payments to back small businesses

10 September 2025

Late payments are costing the UK economy an estimated £11 billion each year and forcing 38 businesses to shut down every single day. In response, the Government is introducing robust new measures aimed at protecting small businesses, promoting growth, and putting an end to unfair payment practices.

This intervention is particularly crucial for the haulage sector, where many operators already face significant financial pressures. A large number of haulage firms rely on hire purchase agreements to fund vehicles and equipment – making timely cash flow essential to meet debt servicing obligations. When payments are delayed, the impact can ripple throughout their operations, potentially causing them to miss their own financial commitments and threatening the stability of their business.

For many small firms, late payments are more than an inconvenience – they’re a major barrier to growth. Cash flow problems stop ambitious companies from scaling up, investing in new opportunities, or even keeping the lights on. Too often, hardworking business owners face the devastating reality of shutting down simply because invoices aren’t paid on time.

Under the new laws, the Small Business Commissioner will be given stronger powers than ever before. This includes the ability to issue fines worth millions of pounds against big firms that repeatedly fail to pay suppliers on time. The Commissioner will also be able to carry out spot checks and enforce a strict 30-day invoice verification period, helping disputes get resolved faster. In addition to this, maximum payment terms of 60 days will be reduced to 45 days, to give smaller firms the certainty they deserve.

Auditors will also take on a more prominent role, as payment practices come under greater scrutiny at board level. This shift aims to ensure large companies are held accountable for how they treat their suppliers. The introduction of mandatory interest charges for late payments will add further pressure on firms to act fairly.

For small businesses, these changes could be transformative. Instead of wasting hours chasing overdue invoices, owners will finally be able to focus on what really matters – growing their business.

Billed as the most comprehensive support package for small businesses in a generation, this shake-up aims not only to help firms thrive but also to reduce disputes and restore trust across supply chains. These changes play a key role in the Government’s new ‘Small Business Plan’ and were officially introduced on 31 July 2025.

Need advice on how these changes affect your business?

Whether you’re dealing with late payments, supplier disputes, or cash flow pressures, our team can provide the expert support you need. Get in touch to discuss how these new rules could impact your business and what steps you can take to protect your operations.

This article was written by Libby Pritchard.