Late payments cost the UK economy an estimated £11 billion each year, and around 38 businesses close every day because they are not paid on time. Despite this, late payments persist as an issue for many businesses.
Across the UK, delayed invoices continue to place sustained pressure on small businesses. According to the Intuit QuickBooks Small Business Insights Survey, 61% of small businesses report invoices more than 30 days overdue, while 65% are currently owed money.
The average amount outstanding stands at £21,400 – a level that directly affects cash flow and day-to-day decision-making. This is the context for the Government’s latest reforms – the most extensive changes in more than 25 years. These include expanded powers for the Small Business Commissioner to investigate and fine persistent offenders, a proposed 60-day cap on payment terms, and mandatory interest on overdue invoices. The intention is to change behaviour.
The gap between terms and reality
One of the clearest issues is the gap between agreed payment terms and actual payment behaviour. Many organisations operate within standardised frameworks, with payment terms typically set at 30 or 60 days. In practice, those timelines frequently slip. This matters because policy interventions focus on what is contractually agreed, while delays often occur after invoices enter internal systems.
The operational causes of delay
Late payments are often framed as a behavioural issue. In reality, they are just as often operational. In many organisations, invoices move through multiple approval layers across procurement, finance, and operations before payment is released. Where supplier data is inconsistent or systems are not integrated, delays can be introduced at each stage.
Manual processes remain a key contributor. Invoices that rely on fragmented systems or require repeated validation create friction in the payment cycle. Even small inefficiencies can accumulate, extending timelines well beyond agreed terms.
A lack of visibility compounds the problem. Without a clear, real-time view of where invoices sit, businesses struggle to identify bottlenecks or intervene early. As a result, delays are often only addressed once they have already occurred.
Decision-making structures also play a role. Payment approvals are frequently distributed across teams, diluting accountability and slowing execution. These are not isolated issues – they are common features of how payment systems are designed.
Why legislation may fall short on its own
The new reforms are designed to increase accountability through fines, interest penalties, and greater transparency. These measures will raise the cost of poor payment practices. However, they are most effective when delays are deliberate.
Where delays are driven by operational complexity, regulation alone may have limited impact. If internal processes remain unchanged, businesses may still struggle to meet stricter requirements, even with the threat of penalties. This creates a risk that organisations focus on compliance at a contractual level, while underlying inefficiencies continue to drive delays.
From policy to practice
Improving payment outcomes depends as much on how businesses operate as on what they commit to. Organisations that make progress tend to prioritise visibility across the payment cycle, using systems that allow invoices to be tracked in real time. They also take a data-led approach, analysing payment timelines and supplier impact to inform decisions and build internal alignment.
In more advanced cases, payment processes are supported by integrated Procure-to-Pay systems and internal dashboards, helping teams monitor performance and reduce delays at scale. These changes shift payment from an administrative task to a managed process.
A structural problem
What the data shows is that late payments are not simply the result of poor intent. They are embedded in how many organisations structure their systems, processes, and decision-making. This is why the issue has persisted despite previous reforms.
The Government’s latest measures will increase scrutiny and raise expectations. But their success will depend on whether businesses address the underlying causes of delay. Without changes to how payments are processed and prioritised, the gap between policy and practice is likely to remain.
This article is by Kelly Mathis – Director of Procurement at Intuit QuickBooks.