SMEs across the industry have hailed the government’s new Small Business Plan, which promises to crack down on late and slow payments.
The government’s plan to have “the toughest late payment laws in the G7” will mean a shift to enforced 60-day maximum payment terms when paying SME suppliers, reducing to a 45-day maximum after five years.
Alongside stronger powers for the Small Business Commissioner – including fines of up to millions of pounds on persistent late payers – the proposed legislation will require large companies to examine their payment performance at board level, with details reported to Companies House as part of their annual results.
Proposed alongside measures to cut business rates and bolster access to finance, the measures were an “immediate opportunity to drive a quick win for SMEs”, according to Thomas Robson-Kanu, founder of functional beverage firm The Turmeric Co.
Robson-Kanu has spent the last year and a half working alongside other small business leaders to advise first the government’s Small Business Council, then the Small Business Growth Forum, on barriers faced by SMEs.
He said the measures were an excellent move toward “fixing the fundamentals” for SMEs, which traditionally get little support.
“Cashflow is king, so building clear regulation and support around [payment terms] makes sense,” he added.
“If we make sure small businesses aren’t wasting time chasing invoices, which ultimately delays growth and puts businesses at risk, that fundamentally is a great win.”
Late payments cost the economy nearly £11bn a year, according to government data – a “crazy” figure, Robson-Kanu said – and contribute to the closure of 38 UK businesses every day.
Julianne Ponan, founder of allergy-free baking mix manufacturer Creative Nature, said she was “delighted” to see action.
“From tackling late payments to simplifying access to growth advice and support, these measures are a lifeline for SMEs like mine who often face disproportionate challenges with limited resources,” she added.
Groceries Code Adjudicator Mark White vowed to work with other regulators to improve payment performance. He said he was “determined to ensure that large retailers pay their groceries suppliers without delay”.
The government has now opened a consultation on the measures, closing on 23 October 2025.
“I urge SMEs in particular to respond to [the government’s] request for ideas on how to tackle late payments,” said Ian Carrotte, head of business membership group ICSM, which helps firms identify late payers and avoid bad debts.
He added that late payment was a universal problem for businesses across the sector, whether grocers, manufacturers or logistics businesses.
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