Late payments: tackling poor payment practices

This government is committed to tackling the scourge of late payments, which causes the closure of 38 businesses per day and costs the UK economy £11 billion per year. We are grateful for the very high level of engagement with our recent public consultation on proposed legislative measures.

We have been carefully reviewing and analysing responses to this consultation, and will publish our government response early in 2026. We intend to legislate as soon as Parliamentary time allows.

Late payments can disrupt cash flows, prevent businesses from paying their bills, and even lead to business closures. Small and medium-sized enterprises (SMEs) are especially exposed to these issues, as they often have less cash in reserve to act as a buffer. 

The Department for Business and Trade (DBT) is publishing this consultation which seeks views on a package of legislative measures aimed at addressing late payments, and ensuring businesses are paid fairly and on time.  

Late payment is characterised by 4 different but inter-related problems, and the proposed measures aim to address them all. The problems the measures aim to address are:

• late payments. Where businesses fail to pay an invoice within agreed payment terms (30 days where no specific terms have been agreed)

• long payment terms. Where payment terms are agreed over extended periods, beyond 60 days

• disputed payments. Where businesses disagree over the goods or services supplied and payment is delayed or reduced

• unfair practice around retention payments. Specific to the construction sector, where retained money can be lost through upstream insolvency or subject to late, partial or non-payment

DBT has also prepared an accompanying Options Assessment, which assesses the impact of the proposed measures. 

We welcome views from businesses, trade representatives, and other organisations or individuals who are interested parties to the proposals.