✅ What are the new late payment rules for UK small businesses?
The regime now runs on four tracks: the Fair Payment Code (tiered Gold/Silver/Bronze awards for businesses proving fast payment, replacing the old Prompt Payment Code); statutory interest you can already charge - Bank of England base rate +8% plus fixed compensation of £40–£100 per invoice; disclosure pressure - large companies reporting payment performance, with board-level accountability proposed; and government consultation on legal maximum payment terms (60 days, tightening toward 30/45) with a strengthened Small Business Commissioner. Money Pilot’s practical fix meanwhile: invoice finance - 200+ lenders, zero broker fees, FCA regulated (FRN: 968705).
The late payment rules uk small business owners operate under are finally growing teeth. Government figures put the cost of late payment at roughly £22,000 a year for an average small firm and blame it for tens of thousands of business closures annually - numbers that pushed a once-voluntary regime toward real reform: a tiered Fair Payment Code, statutory interest most SMEs never claim, payment-performance reporting for big customers, and consultation on hard legal limits to payment terms. Here is the regime as it stands, the rights you already hold, and the financing move that ends the wait entirely.
Fair Payment Code UK explained - the tiered badge that replaced the PPC
The fair payment code uk explained in one line: a voluntary-but-audited awards scheme, run through the Small Business Commissioner, that replaced the discredited Prompt Payment Code with tiers a supplier can actually read:
- Gold - at least 95% of all invoices paid within 30 days
- Silver - 95% of small business invoices within 30 days and 95% of all invoices within 60
- Bronze - 95% of all invoices within 60 days
- The supplier’s use - check a prospective customer’s tier (and large companies’ published payment-performance data) before extending credit: a buyer with no badge and 70-day reported averages has told you your cash flow plans already
- The honest limit - it remains voluntary: a code signature is evidence of intent, not a guarantee of your invoice
Bank of England held base rate at 4.25% in June 2026 - waiting for inflation to cool.
73% of UK SMEs expect to grow in the next 12 months - confidence remains strong.
Statutory interest overdue invoices UK - the rights you already have
Statutory interest overdue invoices uk rules are older and stronger than most owners realise: under the Late Payment of Commercial Debts legislation, once a B2B invoice passes its due date (or 30 days where no terms were agreed), you are entitled to interest at base rate +8% and fixed compensation per invoice - £40 (debts under £1,000), £70 (£1,000–£9,999), £100 (£10,000+), with reasonable recovery costs on top. No contract clause is needed; the right exists by statute and cannot be contracted below a “substantial remedy”. Why so few claim it is commercial, not legal - fear of losing the customer - which is exactly the imbalance the reporting-and-reform push aims at. The professional middle path: state the Act on your terms, invoice cleanly (PO numbers, correct entity, named approver), chase on a fixed rhythm, and deploy the statutory rights on the customers who abuse the relationship rather than on the ones having a bad month.
30 day payment terms law UK - what’s actually changing
The 30 day payment terms law uk question - will fast payment become mandatory - is the live reform frontier, and worth tracking precisely because lenders, boards and buyers are repositioning ahead of it.
The reform package in motion:
- Consulted hard caps - government has consulted on legal maximum payment terms: 60 days first, with a trajectory toward 45/30 for standard B2B invoices
- Board-level accountability - proposals putting payment performance in front of audit committees and annual reports, making 70-day averages a governance problem, not just a supplier’s
- A stronger Small Business Commissioner - expanded powers to investigate and act on persistent late payers
- Public-sector pull-through - 30-day terms cascading through government supply chains, dragging private standards with them
- The planning assumption - final statutory dates were still being confirmed: treat 30–60 day discipline as where the puck is going, and build terms, contracts and finance accordingly
Getting paid on time - the operational playbook
Rules help; process pays. The firms that collect fastest run the same drill: credit-check and tier-check every new account before terms are granted; invoice the day the work completes, electronically, to the named payable contact, with everything the buyer’s system needs to approve first time; chase to a calendar (day 1 statement, day 7 call, day 14 escalation) rather than a mood; charge statutory interest where the relationship has already failed; and concentrate risk deliberately - one customer over 30–40% of your ledger is a strategy decision, not an accident. None of this is glamorous, all of it compounds.
Ending the wait - when finance beats chasing
Reform changes behaviour slowly; payroll leaves monthly. For businesses whose real problem is the gap - strong sales, 45–75 day debtor books, bills due now - the structural answer is invoice finance: 80–90% of each invoice advanced on issue, the wait transferred to a funder built for it, confidentially where preferred. The decision tree lives in our guides - invoice finance vs business loan, factoring or discounting, and how invoice finance improves cash flow - with the wider menu in our working capital options guide. Money Pilot arranges the facility across 200+ lenders at zero broker fees: call 020 4634 8617 with the aged-debtor report, and stop funding your customers’ cash flow for free. FCA regulated (FRN: 968705).
