The Government’s late payment proposals UK for 2026 are being presented as a renewed attempt to tackle a long-standing problem affecting businesses. However, for those working at the sharp end of credit control and debt recovery, there is a clear sense of familiarity. Much of what is now being suggested already exists under the Late Payment of Commercial Debts Regulations 2013, which has been in place for over a decade.
That framework already provides businesses with the right to charge statutory interest, apply fixed compensation, recover reasonable costs, and challenge extended payment terms. In simple terms, the tools are already there. The current proposals do not materially change those rights. Instead, they represent a renewed push for businesses to actually use them.
Suppliers are once again being encouraged to take a firmer stance — to clamp down on late-paying customers, to escalate matters earlier, and to challenge extended payment terms. But this raises a fundamental question: how many suppliers are realistically in a position to dictate payment terms to a large company?
In practice, most are not. Payment terms are often imposed, not negotiated. Suppliers accept them to secure or retain business, not because they are commercially comfortable. Being told to challenge those terms assumes a level of bargaining power that simply does not exist for a large part of the supply chain.
The same applies when it comes to enforcement. Charging interest, applying compensation, or recovering costs may be legally correct, but it is not without consequence. Taking a harder line with a customer can strain relationships, impact future orders, and in some cases result in lost business altogether. This is the commercial reality that sits behind every decision.
This is where policy and practice diverge. Enforcing statutory rights is not simply a legal step — it is a commercial decision. Businesses weigh the risk of enforcement against the value of the relationship, and in many cases choose to absorb the loss rather than escalate the matter.
These latest late payment proposals UK do not materially change the legal position. That is why the problem persists. The legislation is not weak. The rights are clear. But they rely on suppliers being both willing and able to use them. Debtors understand this, which is why late payment continues to be tolerated across many sectors.
The current proposals do not fundamentally alter that position. They repeat the message — act earlier, charge what you are entitled to, and push back on poor payment practices — but without fully addressing the commercial imbalance that prevents many suppliers from doing so.
If behaviour is to change, the focus should not be limited to the front end of the transaction. Greater attention needs to be given to what happens when companies fail, and the scale of losses creditors are forced to absorb.
NPD Comment
The Government would do better to focus less on repeating existing late payment messaging and more on the root cause — company failure and the substantial sums creditors are forced to write off when businesses collapse.
In many insolvencies, HMRC is the largest creditor. That alone should be a clear indicator of the scale of the issue and the level of exposure within the system.
The late payment proposals UK highlight a familiar issue — strong legislation, but limited application. Rather than continuing to place the burden on suppliers to police late payment behaviour, a more effective approach would be to introduce a dedicated insolvency review function. This could involve randomly selecting failed companies for a detailed forensic audit, examining trading conduct, payment practices, and the events leading up to insolvency.
Such an approach would serve two purposes. First, it would provide greater transparency around how and why businesses fail, particularly in cases where significant creditor losses arise. Second, it would act as a deterrent against poor or abusive practices, including the misuse of limited liability structures.
At present, too many failures pass through the system with limited scrutiny, while creditors — including HMRC and trade suppliers — absorb the losses. If behaviour is to change, the focus should not be solely on late payment at the front end, but on accountability at the point of failure.
A director may think twice about using suppliers as a form of informal finance if there is a real prospect of forensic review and personal accountability where misconduct is identified.
A late payment invoice, including statutory interest and compensation, can be generated in seconds using the Credit Control Room portal — simply enter the original invoice date and amount.
