The number of large UK businesses paying their bills on time has increased, with official statistics showing a 10 percentage point drop in the proportion of invoices paid late in 2025. According to the latest figures, this represents a significant improvement from when records began in 2018, when the proportion of invoices paid late was 25%. This trend is particularly welcome news for small businesses that have long struggled with late payments, with some firms being forced to close due to financial hardship.
Late payments can have a devastating impact on a business, leaving owners struggling to pay staff, cover costs, and invest in growth. The economic cost of late payments is estimated to be around £11 billion per year, making it a significant concern for the UK economy. However, the latest figures suggest that progress is being made, with many large businesses taking steps to improve their payment practices.
The government's Reporting on Payment Practices and Performance Regulations 2017 has played a crucial role in driving change, requiring large UK businesses to disclose their payment practices, policies, and performance twice a year. This information is publicly available, allowing small suppliers to check a company's payment record before signing a contract. The data shows that some regions, such as London, have made significant progress in reducing payment times and late invoices.
However, the picture is not uniform, with some sectors, such as manufacturing, still struggling with long payment times and high proportions of late invoices. The government's Commercial Payments (Late Payments) Bill aims to address this issue, promising the toughest payment regime in the G7 and significant reforms to payment practices in over 25 years.
Business Secretary Peter Kyle has vowed to push through the legislation despite corporate lobbying, and the Small Business Commissioner, Emma Jones, has welcomed the bill, saying that it will help to tackle the root causes of late payments. The commissioner's office also manages the Fair Payment Code, a tiered awards scheme designed to drive best practice and improve payment performance.
While the trend is encouraging, there is still much work to be done. Even with the improvements seen in recent years, around 15% of invoices are still paid late, and many businesses are still struggling to cope with the financial impact of late payments. The test of the new regime will be whether it can help to shift the final 15% of late invoices and bring about even greater improvements in payment practices.
