Accountancy organisations have backed UK Government proposals aimed at tackling late payment by larger companies, after the measures were set out in the King’s Speech.
Among the plans is a proposal to fine bigger businesses that repeatedly fail to pay suppliers on time, including where payments owed to small companies remain unsettled after 60 days.
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The measures are intended to address a persistent issue for small and medium-sized enterprises (SMEs) across the UK, where overdue invoices continue to weigh on cash flow and increase financial uncertainty.
The late payment proposals were included in a wider legislative programme spanning more than 35 bills and draft bills.
The government said the package is intended to support the economy and improve the environment for both businesses and consumers.
Commenting on the late payment measures set out in the King’s Speech, Alan Vallance, CEO of the Institute of Chartered Accountants in England and Wales, said: “Late payments are damaging to the economy, threatening jobs and the survival of otherwise productive businesses. Time spent chasing payments is time that is not being used by businesses to win new work and grow, and this legislation will make a real difference to payment culture.”
Glenn Collins, head of technical and strategic engagement for UK at the Association of Chartered Certified Accountants, said: “Late payment chokes SME growth by holding back the cash businesses need to operate and expand. It ties up cash that businesses need to pay staff, invest in growth and manage day-to-day operations.
“ACCA welcomes the commitment to tackle poor payment practices, but the real test will be whether reforms improve cash flow in practice and give smaller businesses the certainty they need to plan and grow.
“Given the impact that late payments have on small businesses, we would urge the government to seek to bring in the reforms at the earliest possible opportunity. We welcome the government’s commitment to make this legislation the strongest in the G7.”
Alongside the late payment plans, the government also set out a Financial Services Bill.
The bill would merge the Payment Systems Regulator into the Financial Conduct Authority, bringing oversight of the payments sector into one regulator.
It also includes reforms to the Financial Ombudsman Service, which handles disputes between consumers and financial companies.
Commenting more widely on the King’s Speech, Vallance said: “The government faces tough choices as it reels from last week’s local election results amid global uncertainty caused by the Iran war. Even with this planned legislation, top of the list must be prioritising measures to enable the economic growth the country needs.
“Earlier this month, the ICAEW members we asked said the government should prioritise tax simplification, provide regulatory clarity on AI and update the skills framework.
“Our members tell us that doing business is too complicated, too expensive and too uncertain. We hope the government will commit to reducing the burdens on business to drive economic growth and boost confidence.”
Collins added: “The King’s Speech sets an important direction for the year ahead. ACCA welcomes the proposed reforms that support growth, strengthen business confidence, and remain practical for SMEs and the professionals who advise them. ACCA urges the government not to lose sight of these aims in the legislation it proposes.
“Good policy should improve outcomes without adding unnecessary complexity and that is especially important at a time when firms are balancing resilience, compliance and investment in skills.”
Andrew Harding, CEO of the Chartered Institute of Management Accountants, said: “The Government missed an important opportunity in the King’s Speech to set out a long‑awaited review of corporate reporting.
“A clear commitment to prioritise simplification would have sent a strong signal that regulation is being reset in a way that genuinely supports business and economic growth, ensuring the UK remains a competitive and attractive place to do business.”
