SMEs urged to have their say in government consultation on late payments

As the UK government presses ahead with plans to clamp down on late payments, small and medium-sized enterprises (SMEs) are being strongly encouraged to respond to a consultation running until 23 October 2025 on proposals to tackle unfair payment practices.

Late payments are not just an annoyance — they’re a drag on growth, especially for smaller firms that lack deep cash reserves. In the foreword to the consultation, the government cites estimates that late payments cost the UK economy almost £11 billion per year and lead to the failure of about 38 UK businesses every day.

These are some of the key proposals open to consultation:

• Capping payment terms at 60 days, with the possibility of reducing this further to 45 days after five years.
• Imposing a 30-day deadline for raising invoice disputes — if a dispute is not made within 30 days, the business must pay in full (and may be eligible for statutory interest if late).
• Making statutory interest mandatory for late payments (i.e. suppliers will no longer be able to negotiate lower rates).
• Giving the Small Business Commissioner (SBC) new powers, including the ability to impose financial penalties on persistent late payers.
• Reforming the use of retention clauses in construction contracts, either by banning them or requiring protection of retained sums.

Why SMEs Should Participate

• Shape rules that affect you directly
  Many of these reforms are targeted at improving cash flow and fairness in business-to-business (B2B) payments — issues that hit SMEs hardest. Your input can influence how these rules are designed, the transitional periods, sector exemptions, and the balance between incentives and enforcement.
• Ensure practical implementation
  Proposals that look good on paper can create hidden burdens in practice. By giving concrete feedback on how your business operates, you help the government understand real-world constraints—especially in industries or contract types with particular intricacies.
• Raise awareness of pain points
  If your business has encountered a specific unfair practice — e.g. long post-delivery retentions, delayed dispute resolution, or excessively extended payment terms — this consultation is a platform for you to flag those for scrutiny.
• Hold large payers to account
  One aim of the proposals is to shine a spotlight on large businesses’ payment performance and give the SBC tougher enforcement tools. The more SMEs speak up, the stronger the mandate for meaningful change.

How to Respond

The consultation is open until 23 October 2025. The government strongly prefers responses via its online survey. Late payments consultation If online submission is not possible, responses can be emailed to promptpayment@businessandtrade.gov.uk or sent in writing (with clear reference to question numbers) to the Department for Business and Trade.

When responding, you’ll be asked about your business size, sector, region, and your views on each proposed measure (e.g. whether you support them, what drawbacks or unintended consequences might follow, suggestions for exemptions or implementation mechanisms).

The government will publish a summary of responses (naming organisations but not personal data) and aims to share consultation outcomes within 12 weeks after the close date. GOV.UK

Final Word

SMEs represent the backbone of the UK economy — and they are the very group these proposed reforms aim to protect. But reforms only work when they reflect the realities of business life. This consultation is a rare opportunity to speak directly into government decision-making.

If you run, manage, or work in an SME, take a few minutes to respond. Your experience matters — and by contributing now, you can help shape rules that make payment practices fairer and more sustainable for all small businesses.