The UK government has introduced new legislation aimed at increasing transparency around payment practices among large companies. According to a proposal published on 27 July 2025, firms with over 250 employees may soon be required to disclose their average supplier payment times in their annual reports, with audit committees assigned to monitor procedures. The planned measures are intended to address persistent late payment issues, which currently impact more than half of the country’s small businesses and often force them to rely on high-cost bridging loans. The regulations are scheduled for parliamentary debate in autumn 2025 and, if passed, would come into force from 2026. (Source: Financial Times)
Background and implications
- Scope: Applies to companies with more than 250 employees.
- Reporting: Annual disclosure of average payment periods to suppliers becomes mandatory.
- Oversight: Audit committees will take responsibility for monitoring and reviewing payment routines.
- Objective: Reduction of late payments and associated financial pressures on SMEs.
Delayed supplier payments have been highlighted as a significant problem for smaller enterprises across the UK, leading to increased operational costs and strained cash flow. The government hopes that greater transparency and oversight will incentivise prompt payments, benefitting both suppliers and the broader business environment.
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