The UK government confirmed the Small Business Protections (Late Payments) Bill during the King’s Speech on 13 May, marking a step toward addressing persistent cashflow challenges for small businesses. The legislation will undergo parliamentary stages, including readings and eventual Royal Assent, before becoming law. Updates on its progress will be shared as the process unfolds.
Industry Reaction
Reactions from business groups and experts are mixed but largely supportive. Glenn Collins, head of technical and strategic engagement at ACCA, praised the focus on tackling poor payment practices but stressed the need for swift implementation. “The real test will be whether reforms improve cashflow in practice,” he said, emphasizing the importance of timely action to help businesses plan and grow.
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Collins also highlighted the need for the Small Business Commissioner (SBC) to have sufficient resources to enforce new powers effectively. “Persistent late payers should bear the costs of any investigative work,” he added, suggesting a balance between expanded authority and practical support for the SBC.
Lisa Cleaver, SME funding expert and COO of eCapital, acknowledged the value of fines for late payments but pointed to ongoing challenges. “Challenging a big customer risks long-term relationships,” she noted, citing the reluctance of small businesses to jeopardize partnerships over unpaid invoices. She also referenced a 1998 law allowing interest on late invoices, which remains underutilized by many firms.
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Joe Phelan, business banking expert at money.co.uk, linked the bill to potential benefits for freelancers. “Legislation that improves payment protections could directly ease daily struggles for independent professionals,” he said, urging the government to ensure reforms translate into tangible changes.
Financial Impact
Late payments cost UK small businesses an estimated £6.7bn annually, according to industry data. Antti-Jussi Suominen, a business consultant, outlined strategies to mitigate this burden, including setting clear payment terms, using automated invoicing tools, and leveraging legal rights to charge interest on overdue invoices. “Proactive communication and documented policies can reduce disputes,” he said, though many businesses avoid enforcing these measures due to fear of damaging client relationships.
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Experts agree that while the bill represents progress, its success depends on enforcement and resource allocation. Collins urged the government to prioritize reforms, while Cleaver called for broader cultural shifts in how larger firms handle payments. “The bill is a start, but systemic change requires more than legislation,” she said.
As the bill moves through Parliament, its final shape and implementation timeline remain unclear. Business groups will likely push for stronger measures, including stricter penalties and better support for enforcement. For now, small business owners are left waiting for concrete steps that could ease the financial strain of delayed payments.
