'The scale of the problem is stark': Northern Ireland campaigning pays off as Government announces late-payment crackdown

​For too long, late payment has been one of the most damaging barriers to growth for small businesses across the UK.

The UK Government`s announcement of a crackdown on late payments on March 24 marks a decisive turning point. The new laws will finally bring a stop to big businesses using their small suppliers as sources of free credit.

While these reforms are rightly being welcomed, they have not come about overnight. They are the result of nearly two decades of persistent campaigning by the Federation of Small Businesses (FSB). Since the financial crisis of 2008, when late payment practices became deeply embedded, FSB has worked tirelessly to bring this issue into the spotlight by lobbying governments, engaging with policymakers, and supporting its members on the front line.

FSB has been a consistent and determined voice for small businesses and we have worked with Government to deliver the toughest late payments legislation in the G7.

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As a small business owner myself I know first-hand the irreparable damage that can be caused by late payments with knock on effects to our whole supply chain. The scale of the problem is stark. Today, 68% of small businesses in the UK report being hit by late payments in the last quarter. An estimated 38 firms close every day as a direct result of the cashflow crisis that late payment causes. Firms spend more than two working weeks each year on average chasing invoices, while £11 billion is drained from the economy in lost productivity and inefficiency. For many small firms, late payment is not an inconvenience, it is an existential threat.

This matters across every region and nation of the UK, including Northern Ireland, where small and micro-businesses form the backbone of the local economy. The reforms announced will apply UK-wide, ensuring that businesses in Northern Ireland benefit equally from stronger protections, clearer rules, and a more level playing field when dealing with larger customers.

At the heart of the Government’s package is a fundamental shift. The burden will no longer sit solely with small firms to chase, negotiate, and absorb the consequences of late payment. Instead, responsibility is being placed squarely where it belongs - on those who delay payment.

There will be a major strengthening of the Small Business Commissioner`s office. The Commissioner will have powers to investigate poor payment practices proactively, compel information, adjudicate disputes, and issue substantial fines.

Alongside this, new legislation will transform how businesses pay each other. A strict 60-day cap on payment terms for large firms dealing with small suppliers will set a clear legal maximum, ending the “race to the bottom” that has seen terms stretch to 90 days or more. Crucially, a mandatory interest rate, set at 8 per cent above base rate, will automatically apply to late payments.

Transparency and governance are also being strengthened. Large companies with persistent poor payment performance will be required to explain themselves publicly, with boards and audit committees held accountable for driving improvement. Late payment becomes a matter of corporate governance and reputation.

In sectors such as construction, proposals to ban the withholding of retention payments could prove transformative, protecting small firms from losing significant sums to insolvency or non-payment further up the chain.

The message now is clear. For small businesses, help is on the way. For government, the task is to ensure these reforms are delivered in full and without dilution. And for large companies, the era of using suppliers as a source of working capital is coming to an end.

After nearly 20 years of effort, the UK is finally taking decisive action on late payment. The challenge now is to turn this legislative shift into lasting cultural change so that prompt payment becomes not just a legal requirement, but the standard way of doing business.