Time Finance has welcomed the direction of proposed UK legislation designed to address late payments, while warning that regulation alone may not deliver the intended improvement in payment practices.
The Small Business Protections Bill proposes a statutory 60-day limit on the payment terms that large companies can impose on smaller suppliers. It would also introduce mandatory interest on overdue invoices and give the Small Business Commissioner stronger enforcement powers.
These measures could provide smaller businesses with greater certainty over when invoices will be settled. More predictable payment cycles can support cash-flow planning, reduce the time spent pursuing outstanding debts and help management teams make better-informed decisions about investment, recruitment and day-to-day expenditure.
However, Time Finance chief executive Ed Rimmer believes the legislation will have limited effect unless it is accompanied by a broader change in corporate behaviour. Formal payment terms are only one part of the issue. The way larger organisations manage supplier relationships, approve invoices and respond to payment queries will also influence whether smaller companies receive funds within a reasonable period.
The warning places the focus on implementation rather than simply the wording of the legislation. A 60-day payment cap may establish a clearer standard, but its practical value will depend on consistent compliance and credible enforcement. Businesses may also need sufficient confidence to challenge late payments without fearing damage to commercially important customer relationships.
Mandatory interest could strengthen the position of smaller suppliers by making delayed settlement more costly for customers. Nevertheless, the measure will be effective only when interest is applied consistently and businesses are able to exercise their rights in practice. Smaller suppliers often have less negotiating power than their larger customers, making cultural change an important part of any lasting improvement.
Stronger powers for the Small Business Commissioner could improve accountability by creating clearer consequences for poor payment conduct. Effective oversight may also encourage large organisations to examine their internal processes before the new requirements take effect. Faster invoice approval, clearer communication with suppliers and greater board-level attention to payment practices could all reduce the operational risk surrounding implementation.
Time Finance plc (LON:TIME) is an AIM-listed business specialising in the provision or arrangement of funding solutions to UK businesses seeking to access the finance they need to realise their growth plans. Time Finance can fund businesses or arrange funding with their trusted partners through Asset Finance, Invoice Finance, Business Loans, Vehicle Finance or Asset Based Lending.
