01 Aug UK Government Launches Plan to Tackle Late Payments and Empower Small Businesses

The Department for Business and Trade (DBT) has unveiled its new Small Business Plan, aimed at empowering small businesses across the UK. Central to the initiative is a robust effort to tackle the long-standing issue of late payments, which continue to hinder growth and financial stability for many small and medium-sized enterprises (SMEs).

The plan includes proposed legislative changes that would strengthen the powers of the Office of the Small Business Commissioner (OSBC), with the goal of saving SMEs time and money currently spent chasing unpaid invoices. According to recent research commissioned by DBT and the OSBC, late payments cost the UK economy around £11 billion annually. SMEs spend an average of 86 hours each year pursuing overdue payments—time that could otherwise be invested in growth and innovation. This wasted time equates to an astonishing £25 million in lost value. You can read the Late Payments Research here.

In response, DBT has launched a public consultation inviting input from businesses of all sizes, trade associations, and financial professionals. The feedback will help shape new legislation and ensure the proposed reforms reflect the needs of those most affected.

The OSBC is also encouraging businesses to join the Fair Payment Code, a voluntary initiative that supports better payment practices. Participants not only receive guidance to improve internal processes but also have the opportunity to earn recognition through a prestigious award.

This plan marks a significant step toward creating a fairer payment culture in the UK, helping small businesses unlock their full potential. Stakeholders are urged to contribute to the consultation and join efforts to end the cycle of late payments.

The policy document can be found here.

For more information on the consultation, research findings, and the Fair Payment Code, visit the Department for Business and Trade’s website.