Commercial Payments Bill raises the stakes for SMEs to modernise their payment systems

Late payment has long been one of the most damaging habits in Britain’s small business economy, and the scale of the problem is hard to ignore. According to the Small Business Commissioner, overdue invoices cost the UK nearly £11 billion a year, force around 14,000 firms out of business annually and consume about 133 million hours of management time as businesses chase what they are owed. That amounts to more than 38 closures a day, a burden that falls especially heavily on small a...

Against that backdrop, the Government’s Commercial Payments Bill is a significant attempt to change business culture. The legislation, which has moved through Parliament, would set a maximum payment term of 60 days, with limited exemptions, and require interest on overdue sums at 8% above the Bank of England base rate. It would also give the Small Business Commissioner stronger powers to investigate persistent poor payment practices and impose penalties, marking a tougher stance on companies that repeatedly fail to pay suppliers on time.

For many smaller firms, the policy is welcome in principle. Yet it also raises a practical challenge: the same businesses that benefit from faster payment will still need to make sure their own outgoing payments are handled accurately and on time. That is not always straightforward. Cash flow can be disrupted by slow receipts, unexpected trading shocks or external events such as floods, strikes or severe weather. In other words, late payment is not always simply a matter of neglect; sometimes it reflects a business under pressure itself.

That complexity is one reason why legacy systems are increasingly being questioned. Traditional tools such as BACS still have a place, particularly where they are embedded in existing processes, but they can struggle to cope with the pace and visibility now required. As payment obligations multiply across suppliers, contractors and employees, finance teams can find themselves working across bank portals, spreadsheets and email trails just to keep track of due dates. The risk is not only administrative inefficiency but also avoidable breaches of new payment rules.

This is where paytech is becoming more relevant. Modern payment platforms can bring multiple payees and deadlines into a single dashboard, making it easier to monitor obligations, set alerts and manage cash flow with greater clarity. They can also speed up transactions, allowing same-day or instant payments when required, which is particularly useful for businesses that themselves receive money late and have only a narrow window in which to pay others.

The growing appeal of this technology is not only about convenience. Automating routine scheduling and reconciliation can free finance teams to focus on the more difficult cases and the periods when cash flow becomes unpredictable. For smaller firms especially, that can mean less time spent on chasing, checking and cross-referencing, and more time spent running the business.

The policy signal from Westminster is clear: late payment is no longer being treated as an unfortunate but acceptable feature of commercial life. The Government and the Small Business Commissioner both argue that stronger rules are needed to improve behaviour across the economy. But regulation alone will not solve the operational problem. Businesses will still need systems that let them see what is due, when it is due and whether they have the capacity to pay.

In that sense, the Commercial Payments Bill is likely to do two things at once. It should help protect smaller firms waiting to be paid, but it also raises the stakes for those making payments further down the chain. For SMEs, the answer may lie in combining better enforcement with better tools. If the legislation is designed to keep money moving more fairly through the economy, then paytech may prove essential to making that promise workable in practice.

Source: Noah Wire Services