UK Plans Fines for Large Firms Paying Suppliers Late

The UK government, led by Prime Minister Sir Keir Starmer, announced new legislation imposing fines on large companies that consistently pay their suppliers late, aiming to address the £11 billion annual economic cost and frequent small business closures caused by late payments. The legislation will empower the Small Business Commissioner with stronger enforcement powers, including the ability to carry out spot checks and impose fines, while introducing maximum payment terms of 60 days, reducing to 45 days over time, to ensure timely payments. Audit committees will be required to scrutinize payment practices at the board level, increasing corporate accountability. The government highlighted that late payments are a major barrier to small business growth by causing cash flow issues and stifling investment, with research showing that if payments were made on time, tens of thousands of business closures could be avoided annually. The construction industry has been particularly affected, with over £26 billion owed in late payments across sectors and a significant proportion of construction invoices paid late. Overall, this 'toughest crackdown on late payments in a generation' aims to free small and medium-sized businesses from the burden of chasing payments, enabling them to focus on growth and sustainability.