Is a new late payments crackdown, ‘Time to Pay Up,’ the beginning of the end for persistent offenders?

Contractors will no doubt feel like they’ve been here before. But in a new announcement entitled “Time To Pay Up” on March 24th 2026, the business secretary Peter Kyle revealed fresh powers for the Small Business Commissioner to investigate and adjudicate over late payment disputes.

There was a slight difference between the formal announcement — “Small businesses will be paid on time” — and Mr Kyle’s social media follow-up — “Small businesses should be paid on time.”

But let’s give the minister the benefit of the doubt, and ignore that small and hopefully not significant discrepancy, writes Safe Collections managing director Adam Home, who has 24 years’ professional experience in credit control and debt recovery.

What’s the main takeaway of the government’s new late payment crackdown?

The main headline is that these new anti-late payment proposals include giving the Small Business Commissioner (SBC) powers to “issue fines worth tens of millions” to firms that break late payment rules.

The government is hailing the overall package as the “toughest crackdown on late payments in over 25 years.”

And I agree — insofar as this may be the only time during those two-and-a-half decades that any sitting government has even merely floated the idea of punitive fines for breaking payment agreements.

Therefore, standing back from the detail and inevitable questions over execution, Mr Kyle’s move against late payers is more than welcome.

What is the new late payments crackdown being called?

But “Time to Pay Up,” as the tough-sounding government and Small Business Commissioner are both calling the package, is also not before time.

The absolute failure of any government to get a grip on what has escalated into a full-blown crisis in payments over the past 25 years will leave a lot of contractors (and other small businesses) wary about believing anything before they see it.

How is the late payment package being received?

As an SME director (Nick Ford) put it in a post which popped up on my LinkedIn feed on the afternoon of Mr Kyle’s March 24th announcement:

“Every government in living memory announced they would end the ‘scourge of late payments.’ Nothing ever changes. Zero enforcement. And zero interest. Regrettable but true.”

It’s true that we’ve had plenty of promises before.

And these false starts do have tangible, adverse impacts. In fact, the lack of government action following the tough words has led to contractual payment terms not being worth the paper they’re written on.

Is this the first step towards meaningful sanctions?

But let’s acknowledge the positives.

The gaping hole in all previous government attempts to tackle late payments, ranging from those voluntary ‘I-promise-to-pay-on-time ’ schemes to the creation of the SBC in the first place, has always been due to the lack of meaningful sanctions.

The kind of sanctions that are tough enough to act as a deterrent to serial late payers.

The details of this new late payment crackdown are currently scarce.

What did Peter Kyle MP say about persistent late payers?

But Mr Kyle’s vow to introduce “multi-million-pound fines to hold…persistent offenders to account” is certainly a concrete step in the right direction of meaningful sanctions.

The package also includes a tightening of the statutory interest and compensation payment rules due to suppliers, like contractors, when payments become late.

How will statutory interest on late payments become mandatory?

The 8% statutory interest rate plus the current Bank of England base rate (so, at the time of writing, 11.75%) will become mandatory on all contracts, overriding the current option for firms to negotiate their own interest rates as part of payment terms.

The Department for Business & Trade (DBT) says: “New mandatory interest on late payments will also be introduced, with a requirement for all commercial contracts to include statutory interest set at 8% above the Bank of England base rate.

“For example, if a small business is owed £10,000 by one of its customers and is paid 60 days later than the agreed payment date, they will be owed £10,293.15 including mandatory interest (£10,000 plus £193.15 interest plus £100 compensation).”

Is the withholding of retention payments going to be banned?

Pleasingly, DBT says that, as part of the package, it will consult on banning the withholding of retention payments in the construction industry — a practice intended to ensure satisfactory completion of projects that has been widely abused over the years.

Less pleasingly, and constituting what contractors whose unpaid invoices we chase down will regard as the chief ‘negatives’ of this late payment crackdown, is the ‘60 days issue.’

This isn’t about the mandatory statutory interest example above, which mentions 60 days. That said, it was a bit odd for the government to choose “60 days” for that example because, by the time you read the next section, you’ll see why ‘60 days’ will now represent a red rag to a bull for tiny suppliers.

What is the new 60-day cap on large firms’ payment terms?

The package from Mr Kyle includes plans to fix statutory payment terms at 60 days, reducing to 45 days after five years. As the government put it, “The changes will include a new 60-day cap on payment terms on all large firms when paying smaller suppliers.”

This 60-45-day payment term measure feels like an unnecessary capitulation to businesses that use long payment terms as a source of free credit. The longer that they hold on to money owed to suppliers, the healthier their cash flow is, and the more interest they earn.

There really is no reason why private contracts shouldn’t be brought into line with the 30-day payment terms, currently required on public sector contracts.

How will larger debtors taking 45 days to pay respond to the 60-day cap?

A limited company director (Dan Barlow) seems to agree with me that this 60-day payment terms “cap” is an unwelcome development.

“Well, actually, the government [just] announced a 60-day cap. Larger debtors who previously paid on 30/45 days will now default to 60, because the ‘government has said they can.’”

What execution issues are there with the new late payment crackdown?

There are questions to be raised around execution and implementation, too. In particular, it’s all very well the government handing the SBC new powers to investigate late payments and issue fines to offenders. But where are the resources for carrying out these investigations going to come from?

Figures from the Federation of Small Businesses (FSB) tell us that late payments add up to an £11billion problem every year, and that 266 businesses are closing every week as a result of not getting paid on time.

Well, the SBC’s office employs just 12 people and manages a budget of £1.15m. That’s nowhere near adequate to investigate the thousands upon thousands of late payment cases happening every month.

Is the government right to focus on large late payers?

There’s also a slightly worrying preoccupation from the government with “late-paying large companies” (to quote Mr Kyle) in this package.

Yes, there is undoubtedly a pernicious culture among some large firms, where they seem to view small suppliers as ‘hired help’ and routinely treat contractual terms with contempt.

But despite the tempting characterisation, it really isn’t always the stereotypical, sprawling corporation laughing at its minuscule supplier, while it holds back the supplier’s cash for services rendered.

In fact, there are a lot of small and medium-sized enterprises failing to pay other SME businesses on time, as well. In some cases, this occurs as calculated acts of malfeasance, which opens a whole other can of worms regarding enforcement and resourcing. And arguably, that’s more of a problem for the Insolvency Service!

The takeaway

I’m going to end where I started, by which I mean that, on balance, I’m giving the government the benefit of the doubt with this latest late payment crackdown.

Put another way, after so long waiting for decisive action from the government to tackle the late payment crisis, we seem to have little choice but to be hopeful about these new promises of tough enforcement.

And that tough enforcement will go hand-in-hand with what will be the “toughest legislation in the G7,” apparently.

Even with such an arguably difficult-to-trump legislative commitment now freshly made, it’s notable that there are immediate calls for the government to introduce other anti-late payment solutions. Even a late payment ‘name and shame’ list, akin to HMRC’s ‘naughty list’ for tax avoidance schemes, is being urged. So my experience — and the experience of others in this space, it seems — indicates that we shouldn’t count on a quick resolution to the UK’s late payments crisis, at least not just yet.