Supplier payment transparency: A turning point for SME cash flow strategy?

19/08/2025

As the UK government tightens its stance on late payments, small and medium-sized businesses (SMEs) may finally see the shift they longed for. The proposed Companies (Directors’ Report) (Payment Reporting) Regulations 2025, alongside the newly launched Fair Payment Code, could mark a new era of accountability for large companies and a strategic opportunity for SMEs to take control of their cash flow and customer relationships.

What’s changing?

From 2026, large UK businesses (250+ employees) may be required to publish supplier payment performance in their annual reports, including:

Average days to pay
Percentage of invoices paid late
Proportion of payments made within 30 / 60 / 60+ days

This would complement existing biannual disclosures but adds greater visibility and reputational pressure.

Meanwhile, the Fair Payment Code could replace the Prompt Payment Code with tougher standards and personal accountability. CEOs and Finance Directors must now sign the code, and SMEs (defined as under 50 employees) should expect 95% of invoices paid within 30 days.

What this means for SMEs

These reforms aren’t just regulatory – they’re potentially a game-changer for how SMEs manage risk, plan finances, and negotiate with customers.

Greater Insight = Smarter Decisions

SMEs could gain unprecedented visibility into the payment behaviour of their larger customers. This enables:

Better financial planning: Forecast cash flow with greater accuracy
Informed negotiations: Use payment data to secure better terms
Strategic partnerships: Choose who to work with based on payment reliability
Leverage in discussions: Back up decisions with publicly available data

Public reporting also puts pressure on slow payers to improve, shifting the power dynamic in favour of SMEs.

Hilton-Baird Collection Services: A strategic business partner

Late payments reportedly cost UK SMEs an average of £22,000 annually and contribute to 50,000 business closures each year. In this climate, professional debt collection services should no longer be a last resort – they’re a proactive safeguard and it’s crucial to engage their services at an early stage.

Here’s how Hilton-Baird Collection Services can support SMEs:

Get paid faster: In many cases, instructing a debt collection agency to assist with the collection of overdue invoices can lead to customers paying faster
Reduce stress: Outsourcing recovery frees up internal teams to focus on growth
Preserve relationships: Acting as a neutral third party, our professional approach is focused on recovering your invoices whilst preserving your important customer relationships
Tailor strategies: We use our experience to adapt our approach to each customer, giving a bespoke service to your challenge
Take the pain away: Our outsourced credit control services can remove the burden of credit control away from your business, delivering scalable resource and expertise to improve collections performance

Conclusion

While the government’s actions will lead to greater transparency, the impact this will have on the UK’s late payment problem remains to be seen.

Businesses must continue to exercise robust credit control procedures and processes in order to get paid on time and use the information that’s about to become more widely available to their advantage.

When customers don’t pay on time, access to knowledgeable and experienced professionals with extensive expertise in recovering debt, without damaging reputation and customer relations, is key. Of course, often the weight of the involvement of an agency results in instant prioritisation by the debtor.

Hilton-Baird Collection Services, armed with experience, are ready to help SMEs build robust credit control frameworks; not just recover revenue, but build resilience for the future.

If your business is struggling with late payments, please get in touch to discuss your options with our experienced team. Call 0800 9774848 or get a no win, no fee debt recovery quote.