My New Powers to Help You Get Paid

Why It Matters

Late payments cost UK SMEs billions and force many out of business; the new regime creates real financial penalties and oversight that can improve liquidity and market fairness.

Key Takeaways

• 60‑day payment cap limits large firms paying small suppliers
• New adjudication offers faster, cheaper dispute resolution outside courts
• Contracts must include statutory interest 8% above BoE base rate
• Audit committees must monitor and disclose late‑payment practices
• SMEs can claim interest now; early escalation to OSBC recommended

Pulse Analysis

Late payments have long been a silent killer for UK small businesses, with recent data showing firms waste an average of 86 hours a year chasing unpaid invoices and 38 companies closing daily due to cash‑flow gaps. The chronic delay erodes profit margins, hampers growth, and skews the competitive landscape in favour of larger players who can afford to stretch payment terms. Recognising the systemic risk, the Department for Business and Trade has empowered the Small Business Commissioner with hard‑line tools that move beyond the traditional "soft power" of mediation.

The reform package introduces four key levers. First, a statutory 60‑day cap forces large organisations to settle invoices within two months, curbing the practice of extending terms to squeeze suppliers. Second, an adjudication function provides a streamlined, low‑cost avenue for resolving disputes, sidestepping protracted court battles. Third, every commercial contract must now embed statutory interest calculated at 8% above the Bank of England base rate, removing the ability of big firms to negotiate away compensation for delays. Finally, audit committees are legally required to audit and publicly explain persistent late‑payment behaviour, creating board‑level accountability that was previously absent.

For SMEs, the reforms translate into actionable steps. Businesses should immediately audit existing contracts to ensure interest clauses are enforceable and use the OSBC’s interest calculator to quantify owed sums. Spotting common delay tactics—such as fabricated “technical glitches”—can trigger early escalation to the Commissioner, leveraging the new adjudication pathway. Over the longer term, the heightened scrutiny is expected to reshape supplier‑buyer dynamics, encouraging larger firms to adopt healthier payment cultures and ultimately freeing up capital that can be reinvested into growth across the UK economy.