The UK Government has launched a consultation aimed at cracking down on late payments in business-to-business transactions. While much of the media focus has been on supporting small and medium-sized enterprises (SMEs), a closer reading of the consultation document confirms that these reforms will apply across the board – not just to SME suppliers.

This matters to the UK meat processing sector, where the issue of payment terms is nuanced and cuts both ways.

The consultation outlines a sweeping package of legislative reforms to tackle late, long, and disputed payments which includes:

• Legally capping payment terms at 60 days, with a future intention to reduce that to 45 days.
• Making statutory interest on late payments mandatory, without exception.
• Penalties for persistent late payers, enforced by the Small Business Commissioner.
• Stricter reporting requirements for large companies, including publication of how much statutory interest they owe for late payments.

Despite the consultation’s political and media focus on helping SMEs, the actual legislative proposals will apply to all “qualifying contracts”, which are defined under the existing Late Payment of Commercial Debts (Interest) Act 1998 as any contract where both parties are acting in the course of business. This means the upcoming legal requirements would impact the entire supply chain, including larger meat processors selling to national retailers or wholesalers.

Companies in the meat processing sector are somewhat unique in that it’s standard practice for processors to pay immediately for livestock purchased directly from farmers or through livestock markets. In fact it’s a long-standing norm in the industry that many farmers won’t leave a livestock market without having been paid.

However, receiving payment from major customers can be a different story, and extended payment terms are still commonplace.

If implemented, these new rules could help level the playing field by legally limiting how long large buyers can delay payments — but only if they are enforced effectively — and they could also be a double-edged sword.

One well-established practice used by larger customers in many industries is to negotiate a discount in exchange for quicker payment. While this may not violate the proposed legislation directly, it can undermine its intent. The government may find it challenging to legislate against these commercial arrangements without interfering in free-market pricing.

If passed into law, these reforms would represent the most sweeping payment legislation in over 25 years, and they will apply to all businesses, large and small. But as ever, the devil will be in the detail. The consultation is open until 23 October 2025 so businesses can join the conversation on how the new rules can be shaped and practically implemented and enforced.