Frequently Asked Questions

Payment terms specify when businesses must pay for goods or services, usually after receiving an invoice. If payment is overdue, suppliers may charge interest and claim legal compensation. 

Yes. 

Public sector organisations are required to pay within 30 days of receiving and accepting an invoice for goods or services. In the private sector, businesses typically establish payment terms with suppliers prior to a sale, often setting a deadline of up to 60 days from the invoice date. If no agreement exists, or if trade credit is used, payment must be made within 30 days of invoice acceptance. 

Longer payment periods may be arranged if both parties consent and the terms are considered fair. 

We define a small business as any firm with fewer than 50 employees.  

We define a larger business as any firm with more than 50 employees.  

Large businesses who fulfil certain criteria have a duty to report their payment practices. You can search for a report here that tells you the average time it takes for a large business to pay its suppliers. 

Poor payment practices include late payment where the invoice is overdue. Other examples are: 

• Payment terms that are grossly unfair or set longer than 60 days without mutual agreement 

• Compulsory discounting or promotional charges without consultation 

• Contractually stipulated deviations to late payment remedies that do not provide adequate redress 

• Excessive delays in resolving invoice dispute. 

A payment is late after an invoice has been issued and accepted, but payment has not been paid within the agreed payment terms. If there are no agreed payment terms a payment is late if an invoice has been issued and accepted but payment hasn’t been received within 30 days.

Where you have attempted to resolve the outstanding debt yourself without success you can contact us at the OSBC for information and support. We may be able to investigate the dispute and make recommendations to resolve the matter. If we can’t investigate your dispute, we will do as much as we can to help you resolve the situation. 

Under the provisions of the Late Payment of Commercial Debts Act, businesses are entitled to apply both statutory interest and a fixed compensation fee when payment for an invoice is not received by the agreed due date. These charges serve to offset the financial impact of delayed payment. 

While alternative payment terms may be established within contractual agreements, they must remain fair and broadly aligned with the statutory entitlements. 

To calculate the applicable interest and compensation, please refer to the interest calculator available on our website. A link to this tool can be found below: 

Interest Calculator

You can also find more information on charging interest and compensation here: Late commercial payments: charging interest and debt recovery: Interest on late commercial payments – GOV.UK 

You cannot claim interest or compensation for an invoice that has been disputed, legitimately, by a debtor. Late payment charges can be applied if an invoice has been accepted, but payment has not been made within the agreed payment times. The payments term begins at the point that the invoice has been received and accepted. If you think the dispute is unreasonable or that it has taken an unreasonable amount of time to resolve it, we may be able to investigate your complaint and make recommendations to resolve the dispute. You can contact us at the OSBC for advice if you’re in dispute about payments you’re owned. 

Most businesses act positively, responsibly and will actively engage to find a satisfactory resolution to a dispute. We at the OSBC aim to resolve disputes amicably and protect the trading relationship between businesses. However, if you are worried about identifying yourself as the business making the complaint, there are some actions we can take to help support you, however that approach may limit the chances of getting the dispute resolved as it may reduce the level of action we can take. Talk to us and we can agree a course of action that suits you. You can contact us at the OSBC for advice if you’re concerned about maintaining your relationship with clients who have not paid your invoices. 

If you are finding yourself short of cash and not able to pay your suppliers, we would recommend talking to your suppliers as soon as possible and trying to find a way to work together to manage the situation.  

In the first instance you may wish to speak to your bank. They may be able to suggest options to give you the cash you need to pay your bills and manage your cashflow.  

In addition, Business Support Service may be able to offer information on other financing options. 

You may also wish to speak to Business Debtline. They provide free debt advice to small businesses and people who are self-employed.  

You should also check your own accounts to see whether you are owed any money that you could collect from your customers. Contact us at the OSBC for advice if you’re in dispute about payments you’re owned. 

There is no charge to use our services. Information, guidance, and our complaint scheme is free and available to all small businesses with fewer than 50 employees. 

Yes. The Enterprise Act 2016 which supports the appointment of the Small Business Commissioner states that complaints can only be investigated if the dispute is made by a small business against a large business. 

However, where if we can’t investigate a complaint, we will do as much as we can to give you the information and support you need to resolve the dispute yourself, or to point you to another organisation that can help. Often just knowing that we are supporting you is enough to make firms pay what they owe. You can find more information on our website about the support available for resolving disputes where OSBC are unable to assist: External Resources – Small Business Commissioner 

The Small Business Commissioner can only investigate disputes between small and large businesses. If your dispute is with another small business, we will give you support and signpost you to other appropriate dispute resolution services. If you and the other small business are agreeable, we can set up informal conversations between you in the hope that you can reach a mutually acceptable solution. You can find more information on our website about the support available for disputes with small businesses: External Resources – Small Business Commissioner 

We are not qualified to provide legal advice and contracts are legal documents. We do provide general support and information on contracts which can be found on our website. The link to this can be found here: Our Guide to Creating a Contract.  

You will need independent legal advice if you have concerns or disagreements about a contract. You can search for a legal adviser, solicitor or barrister here. 

No. Complaints from the construction sector or work undertaken under the Housing Grants, Construction and Regeneration Act 1996, are outside the remit of the Small Business Commissioner. “The Construction Act” sets out a legally defined dispute resolution system with legally binding independent adjudication. You can appoint an independent adjudicator via the Construction Industry Council.

The Small Business Commissioner can only investigate disputes between businesses in the private sector. Disputes with public sector bodies (including Government Departments and Local Authorities) are investigated by the Public Procurement Review Service (PPRS).

If a client disputes the validity of an invoice— whether the amount charged or the reason it was issued —they are entitled to dispute an invoice. In such instances, they should make contact promptly in order to seek resolution prior to the payment due date. 

Although there is no statutory timeframe within which an invoice dispute must be resolved, all parties are expected to undertake reasonable efforts to address and conclude the matter in a timely and equitable manner. 

Should you consider that the dispute itself, or the duration of its resolution, is unreasonable, you may refer the issue to the Office of the Small Business Commissioner (OSBC), which may be able to investigate and provide assistance. You can contact us here:  Contact us at the OSBC 

We can only investigate complaints about businesses where they have some form of UK presence, for example an office or factory in the UK (United Kingdom). We can’t investigate complaints about businesses that have no UK operation or are based entirely overseas. However, we can give you information about chasing debts unpaid by overseas businesses. 

Complaints regarding non-payment should be submitted within 12 months of the payment due date. If more than 12 months have passed, we may be unable to assist with your complaint. Additionally, we may not be able to progress your complaint if you have not made reasonable efforts to resolve the matter directly with your customer. It is therefore important to try to and resolve the issue yourself as soon as possible.