Late payments cost UK SMEs £22,000 a year - but change may be coming

The £22,000 figure comes from research cited by the government when it announced its late-payment crackdown in September 2024: according to Intuit QuickBooks, late payments cost SMEs £22,000 a year on average, alongside 56 million hours of lost productivity across the economy. Since then, change has genuinely started moving - a new Fair Payment Code launched in December 2024, and in May 2026 the Commercial Payments Bill entered Parliament, billed as the largest crackdown on late payments in over 25 years. But none of it is law yet, and none of it collects the money you’re owed today.

Where the £22,000 comes from

Headline late-payment statistics get recycled endlessly, so it’s worth being precise. The £22,000-a-year average cost to SMEs was cited in the Department for Business and Trade’s September 2024 announcement, attributed to Intuit QuickBooks research, and the government repeated a similar Smart Data Foundry figure when launching the Fair Payment Code that December.

Newer government-commissioned research (London Economics, July 2025) measured something slightly different - the amount owed rather than the annual cost - and found affected businesses are owed around £17,000 each at any given time, with late payments costing the UK economy almost £11 billion a year and closing around 38 businesses a day. Different yardsticks, same conclusion: for a small firm, late payment is a five-figure problem. We break down the full landscape in how many UK businesses are owed money.

What has already changed: the Fair Payment Code

In December 2024 the Office of the Small Business Commissioner launched the Fair Payment Code, replacing the old Prompt Payment Code. It’s a voluntary scheme with teeth of the reputational kind: firms earn gold, silver or bronze status based on how fast they actually pay (gold requires paying at least 95% of invoices within 30 days), and hundreds of businesses have been accredited since launch. For suppliers, it’s a useful due-diligence signal - a customer with an award has evidenced its payment performance; one that quietly dropped off the old code’s list may deserve tighter terms up front.

What may be coming: the Commercial Payments Bill

After consulting through late 2025 and publishing its response in March 2026, the government introduced the Commercial Payments Bill in the House of Lords on 19 May 2026. Its main proposals:

• A 60-day cap on payment terms between businesses, with strictly limited exemptions - closing the loophole that lets big customers impose 90- or 120-day terms.
• Mandatory interest on late payments at 8% plus the Bank of England base rate - turning today’s right to charge into an automatic obligation on the payer.
• A fixed sum for late-raised disputes, targeting the tactic of querying an invoice at the eleventh hour to restart the clock.
• A ban on withholding retention payments under construction contracts.
• Real enforcement powers for the Small Business Commissioner - to investigate poor payment practices, adjudicate disputes outside court, and fine persistent late payers.
• Tougher reporting, including boards of persistently late-paying large companies having to publish commentary on their payment performance.

That’s a genuinely significant package. It is also not yet law: the Bill must pass both Houses, and its measures will only bite after Royal Assent and commencement. “Change may be coming” remains the honest tense.

Don’t wait for Parliament

Here’s the part the headlines skip: most of what the Bill would mandate, you can already claim. On qualifying commercial debts, statutory interest and fixed compensation of £40, £70 or £100 per invoice accrue automatically under the 1998 Act - the free late-payment calculator quantifies both and generates a demand letter. If a polite chase fails, a letter before action formalises the claim, and professional debt collection puts pressure behind it without going near a courtroom.

The businesses losing £22,000 a year are overwhelmingly the ones absorbing late payment as a cost of doing business. The law already says it isn’t one.

Recover what you’re owed now

If you’re carrying overdue invoices while Parliament debates, act on today’s rules rather than tomorrow’s. Compare vetted debt recovery agencies blind on Collect Compare - fees, model and specialism, with names hidden so you choose on substance - or let us match you to the best fit. Free for creditors: the agency you choose pays for the introduction.

This is general information, not legal advice. The Commercial Payments Bill is draft legislation and its provisions may change before (and if) it becomes law.