Time is Money : The Case for Late Payment Reform exposes the insufficient measures in place to hold big businesses to account and calls for a level playing field for smaller firms . This comes alongside a Department for Business and Trade ( DBT ) prompt payment and cash flow review – ending in Spring 2023 – and looks at improving arrangements to support small businesses experiencing difficult payment practices .

Key findings in the report include :

• Over half ( 52 %) experienced late payment .

• Just one-quarter ( 25 %) reported increased late payments .

• The most affected sectors include education , construction , administrative , professional , scientific , transportation , IT , arts and human health and social work .

• Small businesses in the southeast , east of England and Northern Ireland were more likely to experience late payments .

Small businesses are increasingly under pressure from the cost-of-living crisis and the threat of recession , leading many to take out , and pay back , loans . These can often result in late payments , causing cash flow pressures . We spoke to two industry experts about this and they offer their thoughts below .

Time is Money contains proposals for the government , including :

• Give audit committees of large firms oversight of payment practices and reporting on progress in their annual report .

• Publicly commit to limit the maximum payment terms to small suppliers in law by 2027 if the situation does not improve .

• Bar late payers from public procurement contracts .

• Impose 30-day payment terms , which should be a maximum throughout supply chains .

• Mandate the Small Business Commissioner to investigate potential instances of poor payment proactively , instead of only when a complaint has been made .

• Make the Prompt Payment Code ( PPC ) mandatory for all local authorities .

• Create a new local authorities Payment Practice League Table with financial incentives for those at the top and bottom for England .

Tina McKenzie , Policy Chair , FSB , said : “ Enough is enough . Late payments in the UK have continued to spiral out of control . Our report highlights the urgent need for change and the importance of fair payment practices and sets out a clear set of reforms .

The report highlights the impact of late and delayed payment on small businesses and the public ’ s expectations around prompt payment :

• Over one-third ( 37 %) applied for credit to manage their cashflow .

• Just 62 % of the British public say they think businesses were paid within a week .

• More than half ( 55 %) of the British public would support more controls .

“ Small firms are already being stretched beyond their limits with rising energy bills , rampant inflation and a mounting cost of living crisis . Cashflow is already tight , and that is compounded by being kept waiting months for invoices to be paid – which is a serious roadblock to growth and investment . This also hinders productivity due to the excessive time and effort expended on chasing late payments . “ It ’ s a double whammy that is stifling business success , and in turn , holding back the UK ’ s economic recovery .”

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