Over the past year, I have spoken to hundreds of businesses across the UK. While their challenges vary, one message consistently comes through: how a business pays its suppliers matters.
And the scale of the issue shows why.
Late payments cost the UK economy almost £11 billion every year, with around 14,000 businesses closing because they are not paid on time. Businesses affected by late payment spend an average of 86 hours a year chasing money they are already owed.
Those are big numbers. But behind each one is a business owner trying to manage cash flow, pay staff and grow their business. Small firms tell us about the time they lose chasing invoices when they could be winning customers, developing products or investing in growth.
For many years, the conversation focused largely on compliance. Are invoices paid within agreed terms? Are reporting requirements met? Are organisations following the rules?
Those questions still matter. But they are no longer the whole story.
Increasingly, the question is: how do you treat the businesses that help you succeed?
Payment culture is becoming just as important as payment compliance.
And that is why the Government has brought forward the Commercial Payments (Late Payments) Bill, which would introduce the toughest late-payment regime in the G7.
My message to big businesses is simple: get ready.
Beyond compliance
Compliance should be the floor, not the ceiling.
The organisations making real progress recognise that suppliers are not a source of free credit. They are partners who play an important role in helping the business succeed.
Many Fair Payment Code awardees tell me that improving payment performance requires more than introducing a new process. It means reviewing behaviours, challenging old practices and embedding fair treatment of suppliers throughout the organisation.
So, what does getting ready actually mean?
The Bill represents a significant change in how late payment will be tackled. It includes a maximum payment term of 60 days, with strictly limited exemptions, and mandatory interest on late payments at 8% above the Bank of England base rate.
It will also bring greater accountability. The proposed measures strengthen the powers of the Small Business Commissioner to investigate persistent poor payment practices, adjudicate payment disputes and take enforcement action, including financial penalties.
But getting ready is about more than complying with new rules.
This is an opportunity to look at the culture behind how you pay: how quickly invoices move through the organisation, how disputes are handled and whether paying suppliers fairly and on time is seen as a priority across the business.
The business case for paying well
The businesses I meet want to work with organisations they can rely on. They want certainty, fairness and good relationships.
Paying well builds trust. When suppliers know they will be paid fairly and on time, they have the confidence to invest in their people, develop their products and services, and plan for growth.
There is a benefit for big businesses too. Paying well helps build stronger supplier relationships, reduces the potential for disputes and creates more resilient supply chains. Quite simply, businesses remember who pays them well.
We can help businesses prepare
The good news is that businesses do not have to make these changes alone.
The Fair Payment Code provides a practical way for businesses to demonstrate their commitment to fair payment and recognises companies that are setting an example by paying suppliers quickly and fairly.
But I encourage businesses to see the Code as more than an award.
Use it as an opportunity to look at your own payment practices. Where are the delays? How quickly are disputes resolved? Do your suppliers understand your processes? And is fair payment seen as everyone’s responsibility, rather than something that sits solely with the finance team?
To help your business get ready, visit the Office of the Small Business Commissioner website for the latest updates and guidance on the Commercial Payments (Late Payments) Bill.
Fair payment is good business: get ready!
Key takeaways
- Late payments cost the UK economy almost £11 billion every year, with around 14,000 businesses closing because they are not paid on time.
- The Commercial Payments (Late Payments) Bill introduces a maximum payment term of 60 days and strengthens the powers of the Small Business Commissioner to investigate and act on poor payment practices.
- Payment culture is becoming as important as payment compliance – big businesses are being asked to treat suppliers as partners who contribute to their success, not as a source of free credit.
- The Fair Payment Code provides a practical framework for businesses to demonstrate their commitment to fair payment, recognising companies that are setting an example by paying suppliers quickly and fairly.
- Paying well builds supplier trust and confidence to invest, reduces the potential for disputes, and strengthens the commercial relationships that ultimately benefit the paying business too.
