Bellevue Law: Prompt payment – a fundamental of good business 

11th February, 2025

By Florence Brocklesby, Founder of Bellevue Law 

Too often seen as a purely administrative issue, timely payment of suppliers is actually a matter of fairness. This Good Business Fortnight, it’s time to put prompt payment on the ethical business agenda. 

The problem: business failure and human cost 

With the majority of small business owners experiencing delayed payments every quarter, the human cost of slow payment is very real. Research by the Federation of Small Businesses (FSB) found that an astounding 50,000 small businesses fail every year due to cashflow problems.   

Many more small business owners struggle to pay themselves and their staff, and Small Business Commissioner (SBC) Liz Barclay has described the consequence of late payment on wellbeing and mental health as “catastrophic”. The ripple effects of slow payment can also disrupt entire supply chains, with impacted businesses sometimes unable to pay their own suppliers. 

As the government looks to prioritise growth, there are implications for the wider economy too with businesses whose cashflow is impacted by late payment forced to make cutbacks and curtail investment. With small businesses accounting for half of turnover and 60% of employment in the private sector, the FSB argues that addressing delays in payment could be the single most effective measure to increase UK productivity.   

Building a prompt payment culture 

So timely payment should not be seen as a purely operational issue, but a fundamental part of any company’s environmental, social and governance (ESG) practice. As the Good Business Pays campaign’s CEO Terry Corby says, payment culture is “how a company behaves when you are aren’t looking”.   

But why do so many customers pay slowly? And how can we build a culture of prompt payment? Some customers impose lengthy payment terms of up to 90 days on their suppliers.  Simply put, large businesses with a genuine commitment to behaving ethically should not be using credit from small businesses as a form of free working capital.   

Other businesses routinely pay later than contracted terms. In my experience running a 30-person law firm, those companies often cite their administrative processes as being responsible for payment delays. Most would not tolerate internal systems preventing them from delivering on time to their clients, and their suppliers should not be treated less fairly. 

So this Good Business Fortnight, let’s consider fair payment of suppliers as part of the ESG agenda: 

  • Review your terms of business through an ethical lens – are the terms you impose on suppliers fair? 
  • Take a look at your payment processes and remove any blockages to paying on time. 

Ultimately how a business treats its suppliers is a reflection of its values, and engaging with this issue is vital for any truly responsible business.