Is a Solution on the Horizon for Late Payments?

On Wednesday 30th July, the UK Government announced a landmark consultation on tackling the widespread issue of late payments, a challenge that continues to put immense pressure on small businesses and one that has plagued specialist flooring contractors for decades. As the voice of the contract flooring industry, the Contract Flooring Association (CFA) has committed to submitting a response and is encouraging members to share their input with helen@cfa.org.uk to ensure that it reflects a consensus of member views.

The opening of the consultation coincides with the Government’s publication of its ‘Backing your business: our plan for small and medium-sized business’ plan, designed to help start, grow and build resilience of small business. This plan includes legislating to end late payments, which reportedly costs the UK economy £11bn per year and closes down the equivalent to 38 UK businesses every day. Research looking at how late payments affect businesses has also been published.

The consultation launched by the Department for Business and Trade seeks views on proposed legislative measures to ensure companies pay their suppliers quickly and on time.

The proposed measures within the public consultation are:

• To increase discussion and scrutiny of large companies’ payment practices at board level, including by exploring potential roles for audit committees or company boards;
• Setting maximum payment terms to 60 days, removing the exemption that allows businesses to agree terms longer than 60 days;
• Introducing a 30-day invoice verification period, so that businesses who wish to raise a dispute will need to do so within 30 days;
• Providing the Small Business Commissioner with additional powers and responsibilities to investigate businesses, impose fines and make legally binding arbitration in their function in helping resolve payment disputes;
• Giving the Small Business Commissioner responsibility for spot-checks to ensure accurate payment performance reporting by large businesses;
• Fining large businesses that consistently pay their suppliers late;
• Making interest for late payments mandatory, removing the option for businesses to negotiate lower compensation rates;
• Introducing a new requirement for businesses to report how much statutory interest on late payments they pay their suppliers;
• Following consultation, introducing one of two options related to the use of retention clauses in construction contracts: either prohibiting the use of retention clauses in construction contracts, or the introduction of requirements to protect retention funds deducted and withheld from insolvency and late or non-payment.

The consultation is running for 12 weeks and will close at 11:59pm on 23rd October 2025. Further details can be found here.