TL;DR: The UK government has launched the most aggressive crackdown on late payments in over a quarter-century, introducing multi-million pound fines for offenders, a mandatory 60-day payment cap for large firms, and statutory interest rates of 8% above the Bank of England base rate to protect small businesses and the wider fintech ecosystem.

In a move set to reshape the liquidity landscape for thousands of firms, the UK Government has today unveiled “Time to Pay Up,” a sweeping legislative package described as the toughest crackdown on late payments in over 25 years. Aimed at dismantling a culture of “bully-boy” payment tactics, the new rules represent a massive victory for the Small Business Commissioner and the UK’s burgeoning RegTech sector.

Late payments have long been the “silent killer” of the British economy. Government data reveals that the issue creates an £11 billion annual drag on the economy, directly leading to the closure of 38 small businesses every single day. This new initiative, a cornerstone of the Prime Minister’s “Small Business Plan,” builds upon the foundations of the 1998 Late Payment of Commercial Debt Act to provide the first major enforcement update in decades.

New Powers: Fines and the 60-Day Cap

The centerpiece of the announcement is the dramatic expansion of the Small Business Commissioner’s authority. For the first time, the Commissioner will have the power to issue multi-million pound fines against large corporations that consistently fail to pay their suppliers on time.

Key legislative changes include:

Statutory Cap	A strict 60-day maximum payment term for all large firms.
Mandatory Interest	Interest on late payments is now mandatory, set at 8% above the Bank of England base rate.
Enforcement	Sweeping new investigation powers for the Commissioner to audit corporate payment records.

Fintech Implications: A Catalyst for RegTech and Cashflow Innovation

For the UK fintech sector, this crackdown is more than just a regulatory shift—it is a market catalyst. As large firms are forced to overhaul their accounts payable (AP) processes to avoid catastrophic fines, the demand for RegTech solutions that automate compliance and reporting is expected to skyrocket.

Furthermore, the mandatory interest requirements provide a new data point for Small Business Finance platforms. Fintech lenders can now better calculate risk and offer more competitive invoice financing products, knowing that the “cost of delay” is now legally codified and significantly higher for the debtor. This move is expected to flush liquidity back into the supply chain, allowing small firms to reinvest in R&D rather than chasing invoices.

From 1998 to 2026: A New Era of Accountability

While the 1998 Act introduced the concept of the right to claim interest, it was rarely utilized by small businesses fearing the loss of future contracts. By making the interest mandatory and putting the “teeth” of multi-million pound fines into the hands of a central regulator, the government is shifting the burden of enforcement away from the victimized small business and onto the state.

“Late payments are a handbrake on growth,” the Prime Minister stated during the launch. “By becoming the toughest jurisdiction in the G7 for payment compliance, we are making the UK the best place in the world to start and scale a business.”

Source: [UK Government]