What Is the Fair Payment Code and How Will It Impact Small Businesses?
Late payments are one of the biggest barriers to small business growth, costing UK SMEs £22,000 per year on average and wasting 56 million hours chasing unpaid invoices.
In response, the UK government has introduced a new Fair Payment Code (FPC) as part of a wider crackdown on late payments. But what does this actually mean for small businesses? And will it make a difference?
Here’s what you need to know - and how Payment Bear can help ensure you get paid on time, every time.
What Is the Fair Payment Code?
The Fair Payment Code (FPC) is the new standard replacing the Prompt Payment Code (PPC). It introduces stricter rules on payment practices, requiring businesses to prove they meet fair payment standards to receive an official rating of bronze, silver, or gold.
Some key changes are:
✔️ Public accountability – Large businesses now need to include payment performance in their annual reports.
✔️ Stronger enforcement – Directors of businesses that fail to report payment practices could face criminal prosecution and unlimited fines.
✔️ Clear payment expectations – Businesses must commit to paying invoices on time to be recognised under the new scheme.
✔️ Tighter supply chain regulation – The government recognises that payment delays increase the further down the supply chain you go, which is why these new measures target late payment culture at all levels.
Why Does This Matter for Small Businesses?
Late payments aren’t just irritating, they’re business killers. According to the Federation of Small Businesses (FSB), 50,000 businesses close every year due to cash flow problems caused by late payments. So, it’s a serious problem.
The Fair Payment Code is designed to hold large companies accountable, but it won’t automatically fix the glaringly big problem. The reality is that bad payment practices won’t disappear overnight, and small businesses still need to take control of their invoicing to avoid chasing payments.
💡 That’s where Payment Bear comes in.
How to Protect Your Business from Late Payments
While the new regulations push for better payment practices, they don’t necessarily guarantee you’ll get paid faster. Here’s how you stay ahead of the curve:
1. Automate Your Invoicing Process
With Payment Bear, you can send professional invoices in minutes, complete with your branding and clear payment terms. Super simple.
2. Set Up Smart Payment Reminders
No more awkward chasing and difficult calls. Payment Bear automatically sends friendly nudges to clients before and after due dates, so you don’t have to. Keeping your relationship with your client in the ‘good’ zone.
3. Offer Flexible Payment Options
Give clients the flexibility to pay on time with options like scheduled payments and partial payments to keep cash flowing.
4. Track Payment Status in Real-Time
Know exactly when invoices have been viewed, paid, or ignored, so you can act fast if there’s an issue.
5. Stay One Step Ahead of Late Payers
The new Fair Payment Code is a step in the right direction, but it won’t magically solve the late payment crisis. Businesses still need take proactive steps to protect their cash flow and (biased as we are) we think Payment Bear is the way to help achieve this.
Final Thoughts: What’s Next?
The government’s crackdown on late payments is great news for small businesses, but enforcement will take time. In the meantime, you need to take control of your own invoicing to make sure you’re not left waiting (and worrying).
🚀 Try Payment Bear
Sign up today for a 2-week free trial. No strings attached - just smarter invoicing that keeps your cash flow moving.
