Late Payment Reforms: Why This Changes Everything for Your Business

You know that sinking feeling when you’ve delivered brilliant work, sent the invoice weeks ago, and you’re *still* chasing payment? Meanwhile, your own bills are stacking up, payroll is due, and you’re considering another short-term loan just to bridge the gap.

If this sounds painfully familiar, you’re not alone. And more importantly, help is finally on the way.

The Problem That’s Been Bleeding Us Dry

Here’s a statistic that should make you furious: late payments cost the UK economy £11 billion annually and force 38 businesses to close their doors every single day

For female micro business owners, the situation is even more precarious. We’re already navigating funding challenges, confidence gaps, and the juggling act of running a business whilst managing everything else life throws at us. When a major client decides to sit on our invoice for 90+ days? That’s not just inconvenient - it’s potentially business-ending.

The cruel irony? Most small businesses still pay their own suppliers within 30 days, creating a cash flow mismatch that forces us into borrowing just to survive whilst our own money sits in someone else’s account.

What’s Actually Changing (And Why You Should Care)

The government has just announced the most significant legislative overhaul in over 25 years - what’s being called the toughest crackdown on late payments in a generation.

Here’s what’s coming:

Payment terms capped at 60 days (reducing to 45 days over time). No more 90, 120, or “whenever we feel like it” day payment terms. There’s now a legal limit.

The 30-day dispute rule. If an invoice isn’t disputed within 30 days, it must be paid in full. No more conveniently “discovering” issues two months later.

Real enforcement with teeth. The Small Business Commissioner can now issue fines worth millions. Audit committees will be legally required to scrutinise payment practices at board level. This isn’t a suggestion - it’s mandatory.

Mandatory interest charges. Large companies can no longer bully you into waiving your right to charge interest on late payments. Under existing legislation, you can charge 8% over the Bank of England base rate and now there will be real pressure to enforce it.

What This Actually Means for Your Business

Let’s get practical. These reforms translate into:

More time building, less time chasing. The hours you currently spend following up on overdue invoices? That time comes back to you - for strategy, delivery, growth, or simply catching your breath.

Predictable cash flow for planning. When you know payment is coming within 60 days maximum, you can actually plan. Hire that VA. Invest in that course. Book that childcare. Make decisions based on reality, not optimism.

The ability to choose better clients. With transparency around payment practices becoming mandatory, you’ll be able to spot the serial late payers before you pitch. Your energy is precious - spend it on clients who respect it.

Real consequences for corporate bullying. Finally, there are teeth behind the rules. Large companies treating small suppliers like free banks will face genuine penalties.

The Timeline You Need to Know

The consultation closes on 23 October 2025, with legislation likely passing in early 2026. This means change is coming - and relatively quickly.

Why This Matters Beyond Your Bank Balance

Yes, this is about money. But it’s also about something bigger: recognition that female micro business owners deserve to be paid fairly and on time for the brilliant work we deliver. It’s about valuing service-based businesses as legitimate economic contributors, not convenient cost centres for larger companies to exploit.

This feels like a pivotal moment. Government support is increasing, enforcement is getting serious, and the business landscape is shifting in our favour. But we need to be strategic about how we navigate these changes.

Know your rights under the new reforms. Update your terms and conditions. Don’t be afraid to enforce payment terms - the law is finally backing you up. And lean into community support, because navigating these changes is always easier when you’re not doing it alone.

The days of apologising for asking to be paid for your work? They’re numbered. And that’s exactly as it should be.

The consultation on late payment reforms closes 23 October 2025. Stay informed, stay empowered, and remember - you’re not chasing payments, you’re claiming what you’ve already earned.