Late payment law will fail without cultural change, Time Finance warns

New UK late-payment legislation will have limited impact unless larger companies change how they treat smaller suppliers, according to Time Finance chief executive Ed Rimmer.

The Small Business Protections Bill proposes a statutory 60-day cap on payment terms between large businesses and smaller suppliers, mandatory interest on overdue invoices and stronger enforcement powers for the Small Business Commissioner.

The government has described the legislation as the most significant reform of commercial payment practices in more than 25 years.

Late payments are estimated to cost the UK economy £11bn annually and contribute to the closure of 38 businesses each day.

Rimmer welcomed the proposed legal framework but warned that small suppliers may remain reluctant to enforce their rights against commercially important customers.

An SME that challenges a major client over overdue invoices may fear damaging the relationship or losing future contracts, even where the law clearly supports its position.

That imbalance means mandatory interest and formal enforcement rights may go unused unless corporate behaviour changes alongside legislation.

Rimmer said prompt payment should be treated as part of wider economic resilience rather than as a compliance exercise.

Delayed invoices restrict the cash available for payroll, stock purchases, investment and expansion.

They can also force suppliers to borrow simply to cover the gap between completing work and receiving payment.

Invoice finance provides one route for businesses to release cash tied up in unpaid customer invoices while continuing to trade.

Time Finance offers invoice finance alongside asset finance, business loans and multi-product facilities and is working towards growing its lending book beyond £300m by 2028.

The company said independent lenders will continue to play an important role while businesses wait to see whether the legislation changes payment behaviour in practice.

The bill establishes stronger legal protections, but its impact will depend on enforcement, board-level accountability and whether suppliers believe they can challenge late-paying customers without commercial repercussions.