Government consults on measures to tackle late payments and more powers for the Small Business Commissioner
The Government has shown it commitment to tackling late payments for small businesses and the self-employed this week launching a public consultation on the matter. The consultation seeks the views on proposed legislative measures to ensure companies pay their suppliers quickly and on time plus additional powers for the Small Business Commissioner.
The proposed measures within the public consultation are:
- To increase discussion and scrutiny of large companies’ payment practices at board level – for example, by ensuring audit committees or company boards provide commentary and make recommendations regarding payment performance to company directors before data is submitted to Government and included in the directors’ report.
- Setting maximum payment terms to 60 days, removing the exemption that allows businesses to agree terms longer than 60 days.
- Providing the Small Business Commissioner with additional powers and responsibilities to investigate businesses, impose fines and make legally binding arbitration in their function in helping resolve payment disputes.
- Giving the Small Business Commissioner responsibility for spot-checks to ensure accurate payment performance reporting by large businesses.
- Fining large businesses that consistently pay their suppliers late.
Requiring large companies to include payment performance in annual reports
- The Government is legislating to require large companies to include their headline payment performance headlines in their annual reports.
- This will improve transparency around the payment practices of the largest companies, as well as driving greater engagement at board and investor level with payment performance.
- This measure will apply only to large companies that are in scope of the 2017 Reporting on Payment Practices and Performance Regulations. It will come into force in January 2026.
On the launch of the consultation, Small Business Commissioner Emma Jones said:
It cannot be right that small businesses spend 86 non-productive hours on chasing debt and that 38 small businesses shut up shop every day due to late payment. We want to change this and make life easier for small firms by getting money moving faster through the economy. We are doing this through deploying enabling technology, working in partnership with business, and showcasing companies who are doing the right thing and paying on time. But we know we can go further and faster. Today’s consultation considers new powers for the Small Business Commissioner that would allow us to increase investigations and consider fines. We look forward to hearing from stakeholders as to whether these proposals deliver on our goal of building a positive payment culture across the UK.
Current measures in place:
The Fair Payment Code
- In December 2024 the Small Business Commissioner launched the new Fair Payment Code.
- This is a voluntary code of best practice which showcases awardees for their commitment to paying their suppliers quickly and on time. The Code has a tiered system of gold, silver and bronze awards, with gold awards for businesses with the very best payment practices.
- As of July 2025, over 333 Fair Payment Code Awards have been made (185 Gold awardees, 65 Silver awardees and 85 Bronze awardees). This includes companies such as British Telecoms, Aviva, AstraZeneca, BAE Systems, Lloyds Banking, and Heathrow Airport.
Reporting on Payment Practices and Performance
- The Reporting on Payment Practices and Performance Regulations 2017 require large companies to report their payment performance twice yearly on GOV.UK.
- These regulations were amended in 2025 to introduce metrics on the practices, policies and payment performance for retention clauses in construction contracts
- Out of over 500 companies contacted so far, over half have already returned to compliance or committed to do so.