Late payment can be a real problem for farmers, rural businesses and agricultural suppliers. Whether you are waiting for payment for contracting work, produce, machinery services, haulage, diversification income or professional services, a delayed invoice can quickly put pressure on cash flow. That matters in agriculture, where costs such as feed, fertiliser, labour, fuel, rent, finance and machinery repairs often have to be paid long before income is received.
What is changing?
The UK government has introduced the Commercial Payments Bill, also referred to as the Small Business Protections Bill, to strengthen the rules on late payment. The Bill is intended to help small businesses that supply larger companies by making payment terms fairer and giving businesses stronger rights when invoices are not paid on time.
For farmers and agricultural businesses, this could be relevant where you supply produce, services or goods to larger organisations, retailers, processors, developers, contractors or commercial customers. The proposed reforms include a 60-day cap on payment terms for large businesses paying smaller suppliers, mandatory interest on late payments and stronger enforcement powers for the Small Business Commissioner.
Why this matters in agriculture
Agricultural businesses often operate on tight margins and seasonal income cycles. A late payment at the wrong time can make it harder to manage tax bills, wages, rent, loan repayments, supplier accounts or the next round of inputs. It can also affect your ability to invest in machinery, buildings, livestock, diversification projects or succession planning.
The issue is not just inconvenience. If a farm business is regularly having to chase money it is already owed, that can damage relationships, restrict working capital and create avoidable stress for owners, partners, directors and family members involved in the business.
What practical steps should rural businesses take?
Even before the Bill becomes law, farmers and rural businesses can reduce the risk of late payment by tightening up their paperwork and credit control processes. Clear payment terms, prompt invoicing, good record keeping and early follow-up can make a significant difference. Where appropriate, businesses should also consider whether contracts give them the right to claim interest, recover costs or pause further work if payment is not made.
- Make sure your payment terms are clear before you supply goods or services.
- Invoice promptly and keep evidence of what was supplied, when and to whom.
- Chase overdue invoices early, rather than allowing arrears to build up.
- Keep written records of any payment disputes or promises to pay.
- Take advice before writing off a debt or continuing to supply a customer who is already behind on payment.
Debt recovery and insolvency support
If a customer fails to pay, the right response will depend on the amount owed, the commercial relationship, the terms of the contract and whether the customer is genuinely disputing the invoice. In some cases, a carefully drafted letter before action may be enough. In others, formal debt recovery, insolvency action or negotiation may be required.
The proposed reforms are a welcome reminder that late payment should not be treated as a normal cost of doing business. For farming families, contractors, suppliers and rural enterprises, being paid on time is central to keeping the business stable, resilient and able to plan ahead.
Our commercial & private client litigation team regularly works alongside our restructuring & insolvency team to advise farming and agriculrural businesses on debt-related issues, including unpaid invoices, winding-up petitions, bankruptcy proceedings and practical debt recovery strategies. Whether you are seeking to recover a debt or need advice as a debtor, Laura Mackain-Bremner and Paige Skudder would be happy to assist.
For advice on debt recovery, late payment or commercial disputes affecting your farm or agriculrural business, please get in touch.
