How much time and effort does your company have to spend chasing unpaid invoices? According to Government figures, on average business owners waste 86 hours per annum chasing invoices. That equates to 133 million hours of employment across UK businesses.
According to Government figures late payments amount to an estimated £26 billion (an average of £17,000 per business) and cost the UK economy £11 billion each year, leading to the closure of 38 businesses every day.
The key reasons for late payments include:
- Cash flow difficulties experienced by your customer.
- Disputes regarding supply and/or invoice value.
- Contractual disputes, particularly in “Measured” work such as in construction
On 31 July 2025, the Government launched a consultation on late payments. This consultation expired on 23 October 2025 and the outcome was published on 24 March 2026. Over 850 formal responses were received from businesses across the spectrum and trade bodies – more than ever before on consultations on this topic.
The headline steps the Government are looking to legislate include:
- A 60-day “Hard cap” on payment terms is to apply to large businesses who purchase from smaller parties.
- Mandatory interest shall be payable at the rate of 8% across all commercial contracts. Large companies will be required to report how much late payment interest they owe and have already paid in the financial year, which could trigger an investigation by the Small Business Commissioner.
- Providing the Small Business Commissioner with extended powers.
- A statutory deadline for disputing invoices. It is currently envisaged this will be a 30-day limitation period.
- A ban on retentions within the construction industry. This area is open to further consultation but it is recognised some large companies exploit retentions to the financial detriment of smaller businesses.
The usual, “When Parliamentary time allows,” caveat means there is no indication of timing for the implementation of these measures. In the meantime, businesses need to maintain good credit control procedures and are being encouraged to review their existing terms and conditions, specifically surrounding payment terms and consider how the above proposed amendments could be applied
If unpaid invoices are affecting your business and you need any advice, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01908 033150 (Milton Keynes), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.