If you've ever waited weeks or even months to be paid by a bigger business, you'll know how much damage it does. It can not only cause a lot of stress and a gap in cashflow, but it can waste a lot of your valuable time chasing up the paymens. That's time that you could be devoting to growing and nurturing your business.

So you'll be pleased to hear that the government has finally decided to do something about it.

The new law in the King's Speech

Last week's King's Speech included a new law called the Small Business Protections (Late Payments) Bill. It's one of the most significant moves for small businesses in years.

What the law does

Large businesses will have to pay their smaller suppliers within 60 days. No exceptions. Mandatory interest will kick in automatically on anything paid late. That interest will be at 8% above the Bank of England base rate. And the Small Business Commissioner will get new powers to investigate poor payers, settle disputes and hand out fines to repeat offenders.

Why it matters

Right now, late payments cost the UK economy £11 billion a year. Over 1.5 million businesses were affected in the first quarter of 2026 alone. And with 38 small businesses going bust every single day, poor payment culture isn't just frustrating, it's genuinely putting firms under.

The average SME is currently owed £66,770 in unpaid invoices. That's money that isn't available for wages, stock and rent.

What it means for you

If you supply larger businesses, this law puts you in a much stronger position. You'll have a legal right to be paid within 60 days, plus automatic interest if that doesn't happen.

But it's worth being aware that the law isn't in force yet. It still has to pass through parliament. So for now, it's business as usual when it comes to protecting your cashflow.

What you can do while you wait

Don't rely on the law to fix your cashflow. There are things you can do right now.

Get your payment terms in writing on every contract and invoice. Chase early: a polite nudge a few days before the due date works better than a stern email three weeks after. And if late payments are regularly leaving you short, invoice finance could help. It lets you access the money tied up in unpaid invoices without waiting for your customers to pay.