Parliament’s Business and Trade Committee published a pointed criticism this week of the government’s response to its own proposals for tackling late payment — the practice of large customers taking months to pay small suppliers, which has been squeezing SME cash flow for years. The committee found the government had only fully accepted six of the 36 recommendations put to it, and said its approach “too often restated existing schemes rather than bringing forward fresh proposals.” For any SME that’s ever chased an invoice past its due date, this will sound familiar.
The criticism lands a few months after the government’s March 2026 response to its “Time to Pay Up” consultation, which did confirm some real changes — a maximum 60-day payment term with limited exemptions, and expanded powers for the Small Business Commissioner to investigate poor payment practices and fine repeat offenders. Those reforms are still working their way into force. The committee’s complaint isn’t that nothing is happening — it’s that the pace and ambition fall well short of what smaller firms actually need, at a moment when the same MPs describe SME cost pressures as “comparable to the pandemic.”
What’s actually changing, and what isn’t
The confirmed reforms are worth knowing regardless of the political back-and-forth. The 60-day maximum payment term, once in force, will apply with only narrow exemptions — meaning contracts that currently stretch payment terms out to 90 or 120 days will need to change. The Small Business Commissioner’s beefed-up powers to adjudicate disputes and fine bad actors are also new, and give smaller suppliers a formal route that didn’t really exist before. What the committee is flagging as missing is anything close to a systemic fix — no binding requirement for large companies to report payment practices more transparently, and no meaningful penalty regime for firms that treat suppliers as a source of free working capital.
What SMEs can do without waiting for Westminster
Reform timelines move slowly, and in the meantime cash flow risk sits with the business chasing payment, not the one withholding it. A few practical habits reduce exposure regardless of what Parliament eventually lands on: put payment terms in writing on every contract and invoice, rather than relying on a verbal understanding that’s hard to enforce later; know that you’re entitled to statutory interest and compensation on late commercial payments under existing law, whether or not you choose to claim it; and keep a simple record of payment history with recurring clients, so a pattern of lateness is visible and actionable rather than something you’re guessing at from memory.
For businesses relying on legal templates for supplier and customer contracts, getting payment terms and late-payment clauses right at the drafting stage is far cheaper than trying to enforce vague terms after the fact — something a service like Smallprint is built to help SMEs get right without needing a solicitor for every contract.
The takeaway
The government’s late payment reforms are real but partial, and MPs themselves say they don’t go far enough. Until the fuller picture changes, the practical defence for SMEs is the same as it’s always been: clear written terms, a documented payment history, and a willingness to actually use the rights you already have rather than waiting for Westminster to hand you stronger ones.
