Fair Payment Code 2025: What It Means for Getting Paid Faster (and What SMEs Should Do Today)
Late payment rules in the UK are tightening. The Fair Payment Code (FPC) has replaced the Prompt Payment Code, and the government is consulting on tougher measures to curb slow payers. Here’s what that means for SMEs—and the quick wins you can implement today.
What is the Fair Payment Code?
The FPC is a voluntary code from the Office of the Small Business Commissioner (OSBC) that recognises businesses with fair, faster payment practices. It’s open now, with Bronze, Silver and Gold award tiers.
- Backed by the Small Business Commissioner
- Rewards faster payment, transparency and continuous improvement
- Clear criteria and a simple application process
Learn more or apply: FPC overview.
What’s changing in UK late-payment rules?
Government proposals would cap payment terms and increase board-level scrutiny. Headline points include a 60-day legal cap on payment terms (with the option to reduce to 45 days after a period), mandatory escalation/reporting, and stronger enforcement via the SBC.
- Consultation: Late payments—tackling poor payment practices
- Govt announcement: “Toughest crackdown” press release
- Coverage/analysis: Financial Times (board oversight & 45-day glide path)
Quick self-audit: are your terms “FPC-ready”?
- Contract terms: Target 30–45 days. If you’re at 60+, plan a phased reduction.
- Approval workflow: Remove bottlenecks so invoices are approved quickly.
- Dispute process: Raise and resolve queries within 7 days of receipt.
- Small suppliers: Consider faster terms (e.g. 30 days) to protect your supply chain.
- Board reporting: Track on-time payment rates and median days to pay.
If you’re the one waiting to be paid
For overdue B2B invoices, you can apply statutory interest (8% above Bank of England base rate) and a fixed compensation fee per invoice under the Late Payment of Commercial Debts legislation.
Our Late Payment Calculator works the same way as the official one, but with a big advantage: you can download a clean PDF letter instantly to send to your debtor.
Free tools
- Late Payment Calculator: Work out interest, add compensation, and download a PDF letter: Try it here
- Compare agencies: If payment still doesn’t arrive, compare vetted debt collection partners in under a minute: Start here
Practical next steps for today
- Add a fair-payment statement to your contracts (commit to 30–45 days; faster for micro-suppliers).
- Set an internal SLA to raise disputes within 7 days of invoice receipt.
- Automate nudges: a reminder 3–5 days before due; a day-after-due chaser with interest wording.
- Escalate cleanly after the 7-day final reminder: outsourced credit control, solicitor letter, or instruct a DCA.
For debtors who need support
If you’re on the other side of this and struggling with debt, support is available via charities such as StepChange. Seeking help early is always the right move.
When to involve a professional
If the amount is £500+ or you’ve exhausted reminders, using a reputable agency or solicitor can protect relationships and speed up recovery without you burning more time. Compare your options or choose our expert match.
Collect Compare helps UK businesses recover what they’re owed—transparently. Compare agencies for free or get a hand-picked match based on your debt type and amount.
Sources
- Fair Payment Code overview (OSBC): smallbusinesscommissioner.gov.uk/new-fair-payment-code/
- Fair Payment Code guidance: smallbusinesscommissioner.gov.uk/fpc/
- Government consultation (Jul 30, 2025): gov.uk/government/consultations/late-payments...
- Gov news release: gov.uk/government/news/time-to-pay-up...
- FT coverage: ft.com/content/de7b3471...
