Late payments are no longer just a nuisance. They’re a reputational risk, a board-level issue, and a drag on the UK economy.
Over the past year, the UK government has taken firm action to tackle late payments and protect small businesses — a sector that employs millions and powers innovation across industries. For CFOs, this isn't just compliance — it's strategy.
Why it matters
Late payments are costing UK SMEs an average of £22,000 per year and 56 million hours of lost productivity, according to QuickBooks. The Federation of Small Businesses (FSB) reports 50,000 business closures annually tied to poor payment practices.
That’s a serious economic brake. And the Government is pushing back hard.
“Late payments are simply unacceptable,” said Business Secretary Jonathan Reynolds.
“When the cashflow runs dry, small firms go under — which is why we need to hold larger businesses to account.”
What’s changing? Key updates for finance leaders:
1. New “Fair Payment Code” launched
The old Prompt Payment Code is out. In its place: the Fair Payment Code, which introduces Gold, Silver and Bronze status to shine a spotlight on fast payers.
Liz Barclay, Small Business Commissioner:
“The new code rewards businesses that pay quickly and treat suppliers fairly. 30-day payments will become the gold standard.”
2. Payment reporting now part of annual reports
Large businesses will be required to disclose payment performance in their statutory annual reports, not just twice a year on GOV.UK. This change makes payment behaviour visible to boards, investors, and media.
3. Real consequences for non-compliance
Directors who fail to meet reporting obligations could face criminal prosecution and unlimited fines. The tone is clear: reporting is no longer optional, and accountability is rising.
4. Audit committees under the microscope
A new consultation will explore how audit committees can play a bigger role in overseeing payment practices. This elevates supplier payments from operational to governance priority.
Tina McKenzie, FSB Policy Chair:
“This is what real change looks like. The Business Secretary has recognised the damage bad payment culture causes. This is a huge confidence boost for small businesses.”
The supply chain impact
New research from the Department for Business and Trade found payment delays increase down the supply chain. If you're a CFO at the top of a complex network, your payment terms may be slowing dozens of small firms.
Oliver Lloyd-Taylor, Founder of Black Milk:
“Late payments to us have led to us being late with others. It’s a domino effect.”
Kenny Goodman, co-founder at Hip Pop:
“When we’re paid on time, we can ensure the same for those we work with. It keeps everything running smoothly.”
How tech fits in
Payment speed isn’t just policy — it’s process. Cloud-based finance tools and e-invoicing are already reducing late payments by 20% in other countries.
Steve Hare, CEO of Sage:
“E-invoicing reduces processing times by 44%, saving small companies an average of £11,300 annually. Technology must be part of the solution.”
Reputation is on the line
Campaigners like Good Business Pays are keeping score. Their public watchlists name slow-paying companies, and they’re gaining traction.
Terry Corby, CEO of Good Business Pays:
“Only reputational pressure, backed by legislation and enforcement, will change behaviour. These new measures are a big step forward.”
Why CFOs need to lead
Prompt payment is no longer just good practice — it's policy. CFOs are in the driver’s seat to ensure that:
Payment terms are fair and enforced
Reporting is accurate and visible
Culture shifts from “slow pay” to “smart pay”
This isn’t red tape. It’s leadership.
Want to lead the change?
Review your current supplier terms.
Upgrade your invoice processing.
Champion fair payment inside your organisation.
Because fast payers don’t just help small businesses — they strengthen their own supply chain, brand, and long-term growth.