The UK Government’s proposed late payment reforms would introduce a hard cap on B2B payment terms. Under the plan, businesses will be limited to a maximum of 60 days, with a phased reduction to 45 days within five years.

While this might sound like a simple compliance update, it actually marks the beginning of a structural shift in commercial behaviour. For the first time, payment discipline and statutory interest are being positioned as matters of national economic policy rather than individual business practice.

The reforms will make boards directly accountable for their payment performance, and the Small Business Commissioner will be granted new powers to enforce compliance.

But one crucial question remains: Who will actually enforce the rules when suppliers don’t?

Balancing Relationships and Recoveries

For years, credit managers have lived in a quiet contradiction. Businesses have a legal right to charge statutory interest and compensation on late payments — yet few ever do.

The reason is simple: enforcing those rights risks damaging customer relationships. Nobody wants to jeopardise future sales or sour long-standing partnerships by issuing a late fee.

If late-payment reform is to have any real impact, that model must evolve. Enforcement needs to be systematic, neutral, and professional — not emotional or adversarial.

A practical solution is to separate relationship management from enforcement entirely. Late-payment interest and fees could be collected automatically by a regulated third party — such as a Debt Collection Agency acting more like a compliance partner than a traditional collector.

Imagine a framework where statutory interest is recovered much like a tax: independently, transparently, and without friction. That would allow finance teams to stay focused on customers while ensuring that payment discipline finally carries real consequences.

From Compliance to Culture Change

At 4D Contact, we’ve long believed that enforcing late-payment fees can be a powerful tool to encourage prompt payment. The right to apply these charges is already built into UK law and most customer contracts — yet many businesses still let them slide.

Failing to apply late-payment fees is, at its core, poor account management. In any other area of contractual breach, consequences would follow automatically. Late payment should be no different.

We’ve seen first-hand how organisations that consistently enforce statutory charges not only improve cashflow but also reshape customer behaviour — building stronger, more respectful relationships in the process. When issues do arise, those same customers are more open to collaboration and resolution.

The Government’s proposed reform could be the moment when that approach becomes the norm. As the UK moves toward a 45-day payment economy, the question is no longer whether the law will change, but how enforcement will evolve.

Credit managers may lose the discretion to choose whether to apply statutory fees — but they now have a chance to influence how those fees are collected. By working with sales and compliance teams, businesses can design processes that ensure compliance while protecting customer relationships.

The Opportunity Ahead

Late payment reform doesn’t just create new obligations — it creates an opportunity to redefine good credit management. Businesses that act early to build fair, transparent enforcement processes will not only stay ahead of regulation but also strengthen trust across their customer base.

At 4D Contact, we help companies do exactly that — turning late-payment enforcement into a driver of financial discipline, resilience, and respect.

Is your business looking to improve recovery rates?

4D Contact provide a comprehensive suite of global outsourced credit-control and debt recovery services for businesses looking to improve cash collection and build resilience and financial stability:

• No-win, no-fee.
• No onboarding and administration fees.
• Up and running in days.

Contact us now at sales@4dcontact.com or +44 (0)20 3773 7854