The tide could finally be turning on late business payments

For small businesses, frequent late payments can cause huge problems. They can choke cashflow and cause stress for owners and managers. The uncertainty caused by delayed payments can also hold back new hires or investments. 

The reality is that around two thirds of UK businesses report delayed payments from B2B customers, according to our latest Atradius data. These delays affect about a quarter of all invoiced B2B turnover. While many companies can ride out the waste of time and money such delays tend to entail, for others the problem is so serious that it eventually contributes to their demise.  

So, it’s encouraging that proper help may finally be on its way to end such unjust practices. Legislation contained within the Small Business Protections Bill (formally known as the Commercial Payments Bill) is expected to be implemented by early 2027. 

The bill has, fairly, been described as the most significant attempt in a generation to tackle late payment practices. It really could prove a turning point.

It would, among other things, make it a legal requirement for large UK businesses who have made a significant proportion of their payments late to publish commentary explaining how they intend to improve. This could lead to a naming and shaming process that pushes firms to treat small suppliers more fairly. Paying late would simply be too great a reputational risk to bear.

In addition, the bill also ushers in legislation to remove the option to agree payment terms longer than 60 days. While 60 days may still seem a painfully long time for a small business to wait, and 30 days might be preferred, it at least draws a line in the sand and would help put paid to the creeping normalisation of 90- and 120-day payment terms.

Another change of note will be the introduction of financial penalties on large companies that repeatedly pay suppliers late. If enforced effectively, this could provide the financial sting that really curtails the culture of late payments. It would hopefully make the risks of late payments too expensive.

These changes can’t come soon enough. UK businesses need help now. We asked businesses what the greatest risks are to B2B payments over the next 12 months and cost pressures came top (followed by an economic slowdown and volatile interest rates).

While a big step in the right direction that will hopefully mean businesses will have payments more up to date, the changes will not eliminate payment risk. Legislation can help change behaviour, but it cannot prevent a sudden deterioration in a customer's financial position or an insolvency. Businesses will still need to manage the risks that come with trading on credit and ensure they have the right protections in place.

That's why trade credit insurance will remain an essential part of every risk management toolkit. Together, stronger regulation and robust credit risk protection will give businesses the confidence to invest and grow.