Mazuma, a provider of accounting services for small businesses, has supported the UK Government’s recent introduction of late payment regulations.

The regulations are part of the government’s Small Business Plan, which aims to support small enterprises and stimulate economic growth, with the intention of establishing the most stringent late payment rules within the G7 nations.

The newly announced measures will enforce stricter maximum payment terms, impose penalties on habitual offenders and enhance the enforcement authority of the Small Business Commissioner.

According to government estimates, these changes could help mitigate the £11bn annual impact of late payments on the UK economy.

Mazuma has indicated that these reforms are overdue, as late payments continue to pose challenges for small and medium-sized enterprises (SMEs) in the UK.

Such delays can severely affect cash flow, impede growth, and in some cases, lead to business failures.

Mazuma founder and CEO Lucy Cohen said: “Late payments are not just inconvenient, they can be the difference between survival and closure for a small business. Governments across the UK should really be setting best practice, but too often our clients report that they are some of the worst payers.

“SMEs are the backbone of Britain, but they are too often treated as the smallest voice in the room, by private and public sectors alike. This legislation is a welcome step, but we have been here before too many times, and previous government efforts to tackle late payments have failed to gain real traction.”

The company added that the government statistics reveal that SMEs account for 16.6 million jobs and generate £2.8trn in revenue.

However, Mazuma has raised concerns about the vulnerability of SMEs to larger clients and suppliers who often dictate payment terms and delay invoice processing without facing penalties.

The issue is compounded by the behaviour of some local authorities.

Research from the organisation Good Business Pays has shown that a third of local councils have paid more than 10% of their invoices late.

Mazuma also pointed to an imbalance of power within supply chains, where larger corporations can impose unfavourable payment schedules on smaller suppliers.

It plans to closely observe how the Small Business Commissioner utilises the new powers, which include conducting spot checks and enforcing mandatory payment term limits.

Additionally, Mazuma has called on the government to ensure that penalties for repeat offenders are sufficiently severe to act as a real deterrent, rather than simply being viewed as a cost of doing business.

Lucy added: “We need to see real enforcement – a Small Business Commissioner with teeth – not just good intentions. All too often, small firms have been told to ‘wait their turn’ when it comes to getting paid.

“That culture must change alongside this legislation announced in the Small Business Plan, not only because it is fair but because a thriving SME sector is critical to the health of the UK economy.”