Tackling Britain’s Late Payment Problem

An interview with the Small Business Commissioner

Regular readers of the Beauhurst Insights Substack will know we spend most of our time measuring financial, investment and innovation activity across the UK’s business landscape. But we also dedicate a great deal of time to identifying barriers facing businesses and working with partners to find new ways of spurring economic growth.

That’s why today we want to do something a bit different. To build on our quantitative insights, we’re launching a new interview series where we sit down with business leaders, investors and policymakers to discuss some of the key issues shaping the UK’s economic future.

For our first interview, we’re delighted to be joined by Emma Jones CBE, the UK’s Small Business Commissioner. Having previously founded Enterprise Nation, Emma has spent much of her career championing the interests of small businesses.

In her current role, she is focused on tackling one of the most persistent challenges facing UK SMEs – late payments. With government research estimating that late payments cost the UK economy almost £11bn annually and contribute to around 14,000 business closures each year, we spoke to Emma about the scale of the problem, the potential impact of proposed legislative reforms, and whether innovation in financial technology can help change payment practices across the UK.

The biggest challenges facing UK SMEs

Hi Emma! You’ve spent much of your career championing small businesses, first through Enterprise Nation and now as Small Business Commissioner. What do you see as the biggest challenges facing UK SMEs today, and how have these changed over the past decade?

“Small businesses have had a bumpy decade with challenges shifting from cost of doing business, to lockdown, and getting products and services moving across the globe. The base fundamentals of what small businesses want remain consistent. They flourish in stable trade environments that recognise the risks taken to start and grow, and they expand by having friction-free access to contracts, talent, capital and space. It’s when there is reduced access and heightened burden that small businesses feel the pinch.”

Why late payments remain a problem in Britain

Late payments have been a persistent problem for UK businesses for decades. Why do you think the UK has struggled to address the issue, despite successive governments introducing measures to tackle it?

“You are right that it has been a persistent problem, and it’s a big one, costing the UK economy £11bn per year and closing down 38 businesses every day. Through the Office of the Small Business Commissioner, the government has worked on the problem from a perspective of resolving cases of late payment and showcasing good practice, and we are seeing strong results in both these areas. But a critique that has been made of the Office is it hasn’t had ‘teeth’ when it comes to deterring unfair payment practices. This is being remedied with passage of the Commercial Payments Bill which will move the UK to maximum 60 day payment terms and give new powers to the Office to investigate and fine repeat offenders.

“Alongside the positive promotion of a prompt payment culture, and effective legislation, the Office will continue to address payment from other angles including how advancing technology is playing a role in helping small firms recover debt, and funders checking payment performance before investing in new entities. In short, we want a ‘surround sound’ of companies talking about and tracking payment performance so paying on time simply becomes the business norm.”

The economic impact of late payments on SMEs

Government research estimates that late payments cost the UK economy almost £11bn annually and contribute to the closure of around 14,000 businesses each year. Beyond the immediate cash-flow pressures, what wider impact do late payments have on business investment, productivity and growth? Do you think these economic consequences are sufficiently understood?

“The stats that you quote are ones that government released in July 2025 when the Small Business Plan was launched and I hope these are becoming more understood as we have quoted them at more than 200 events over the past 16 months, to audiences of thousands of businesses (large and small), plus shared with stakeholders and support providers.

“This is to provide a clear picture of the problem statement we are trying to solve. The other figure that highlights the impact late payment has on productivity is that business owners spend on average 86 hours chasing debt which is time that could be spent in a much more proactive fashion making sales, hiring people, going for growth. This is what we are seeking to tackle; to get small firms paid fast with no need for pointless chasing.”

Will new late payment legislation make a difference?

The government has proposed significant reforms to late payment legislation, including new powers for the Small Business Commissioner to investigate poor payment practices and impose financial penalties. How much difference do you expect these changes to make, and what will determine whether they succeed?

“I think the changes will make a big difference and we can already see this happening as small firms ‘know their rights’ and are pushing back on contracts being issued to them with more than 60 day payment terms by telling clients they are aware of upcoming legislation, and large companies are working to get ready for the law by ensuring internal systems and processes can meet the 60 day deadline and automatically apply interest to late payments. The success of the legislation will be based on the business community knowing about it and effective enforcement from the Office. We are working on both these elements at pace.”

Can financial technology help solve the late payment problem?

Beauhurst’s research shows that UK payment-processing companies have secured £16.2bn in equity investment over the past decade, including £900m in the last 12 months alone. Given the scale of investment and innovation in financial technology, why do late payments remain such a persistent problem? Is the main obstacle technological or behavioural?

“I’m delighted to hear this Beauhurst figure as we are keen to see more funding invested in ‘paytech’ companies based on the belief that if new technology, solutions, providers can do the work of getting money moving, there is less need for government intervention. I think the main issue with late payments is cultural in that businesses have been able to issue contracts on 90/120 payment days and not been challenged. Getting to a state of prompt payment requires a multi-faceted approach of enabling technology, effective legislation, high profile comms, transparent reporting, showcasing good practice, and public enforcement. We are working on all areas to drive behaviour and systems change to tackle the issue.”

Protecting small businesses from unfair payment practices

Smaller businesses often lack the financial resources and negotiating power of their larger customers. How can we encourage a more balanced relationship between SMEs and larger companies, particularly when smaller suppliers may be reluctant to challenge poor payment practices for fear of losing business?

“This is the beauty of what the new legislation will deliver. As a small business owner myself for decades, I was reluctant to challenge payment terms from large clients for fear of damaging the relationship. But when the law states that payment terms are maximum 60 days and that interest is ‘automatically’ applied on late invoices, this reduces the need for small businesses to raise and report problems as the law can simply be stated i.e. it’s not the supplier being ‘difficult’, it’s the law of the land that paying suppliers on time is expected. If the law is not followed, this is when the Office will step in to investigate and potentially issue fines that will be publicly reported. I don’t know a single business that wants to be called out in the press for not paying on time.”

What would success look like for late payment reform?

Looking ahead five years, what would meaningful progress on late payments look like? Should success be measured simply through faster payments, or also through improvements in SME survival, investment and growth?

“Success would be shown in the stats we have covered in this interview; can we show that new legislation and effective enforcement, plus continued positive campaigning has reduced non-productive hours spent chasing debt, the number of businesses going out of business, and that hulk of an £11bn cost figure. In short, if we can free up hours for founders to not have to chase invoices and instead consider and work on growth, that would be a top result.”