Right now, somewhere in your accounts, there's money you've already earned and can't spend. You did the work. You sent the invoice. And you're waiting.

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You're not alone — and the scale of it is about to become a national policy problem.

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The number behind the headlines

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UK SMEs are now owed an average of £66,770 in unpaid invoices, a figure that's climbed around 10% in a year. 82% of small businesses report cash flow difficulties, and late payment is estimated to close dozens of otherwise-viable businesses every single day. This isn't a bookkeeping annoyance. It's one of the quietest killers of UK small companies.

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And for once, the government agrees.

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The biggest late-payment reform in 25 years

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Following its "Time to Pay Up" consultation response in March 2026, and a headline slot in the King's Speech, the government has introduced the Small Business Protections (Late Payments) Bill — billed as the most significant late-payment legislation in over 25 years, and the strongest framework of its kind in the G7.

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The headline measures:

• A maximum payment term of 60 days, with narrow exemptions — falling to 45 days five years later.
• Mandatory interest on late payments, pegged at 8% above the Bank of England base rate.
• Stronger rights for suppliers when a buyer disputes an invoice late or without proper detail.

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If you've ever watched a 60-day invoice quietly become an 83-day wait, you'll understand why this matters. On paper, it tilts the field back towards the smaller party for the first time in a long while.

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Why the law won't fix your cash flow

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Here's the part founders need to hear clearly: a cap on terms is not the same as cash in your account. Sixty days is still sixty days of your money funding someone else's business. Mandatory interest helps — but only after a payment is already late, and only if you enforce it. Legislation changes the ceiling. It doesn't change your visibility.

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And that's where most early-stage businesses are genuinely exposed. Your runway on a spreadsheet assumes money arrives on time. Your bank balance knows it doesn't. The gap between those two is where founders get ambushed — six weeks from a payroll run, discovering a key invoice has slipped a month.

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What to actually build

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The reform is a tailwind. Your defence is still your own. Three things, none of them expensive:

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Run a rolling cash flow forecast. Not last quarter's budget — a live, 13-week view of what's coming in, what's going out, and exactly where the pinch points sit. It's the single highest-leverage financial habit a founder can build.

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Know your DSO. Days sales outstanding — how long, on average, your customers actually take to pay. If you can't say the number, you can't manage it, and you can't tell whether the new rules are even helping you.

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Model the lumpiness. Assume your biggest payers arrive late, and check whether you'd still make payroll. If the answer's shaky, that's a decision to make now — calmly — not in a panic later.

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This is exactly the visibility work that slips when you're building, selling, and firefighting at once. Your accountant files the past; nobody's forecasting the next thirteen weeks. That's finance-leadership work — and you don't need a full-time hire to get it. A fractional finance partner gives you a real cash flow picture and tells you where the pinch is coming while you still have options. Finance leadership, without the headcount.

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The new rules will help. But the founders who sleep at night aren't the ones waiting on Westminster — they're the ones who can see their cash three months out.

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Not sure what your real runway looks like once late payers are in the picture? Grab a free hour with us and we'll pressure-test the maths — no boring numbers, no pitch.

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Sources: GOV.UK, "Largest crackdown on late payments in over 25 years as landmark Bill enters Parliament," gov.uk ; Mayer Brown, "UK Government Response to Late Payment Consultation," mayerbrown.com ; Credit Protection Association / Bibby Financial Services (£66,770 average), cpa.co.uk

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