By
October 13, 2026
What Is the UK Fair Payment Code? How It Helps Businesses Get Paid on Time
Late payments remain one of the biggest financial challenges facing small businesses in the United Kingdom. When customers delay paying invoices, businesses can experience cash flow difficulties, struggle to pay suppliers, and face unnecessary pressure on their daily operations.
For small and medium-sized enterprises (SMEs), receiving payments on time is essential for maintaining financial stability and supporting business growth.
To encourage better payment practices, the UK government introduced the Fair Payment Code, a voluntary scheme designed to recognise businesses that pay their suppliers fairly and promptly.
Administered by the Office of the Small Business Commissioner, the Fair Payment Code provides Gold, Silver, and Bronze awards to businesses that demonstrate good payment performance.
The initiative aims to improve payment behaviour across UK supply chains, protect smaller suppliers, and encourage companies to establish more transparent and responsible payment practices.
This guide explains what the Fair Payment Code is, how it works, who can apply, the requirements for each award, and how it benefits UK businesses.
The Fair Payment Code is a UK government-backed initiative that encourages businesses to pay their suppliers within reasonable and clearly agreed payment periods.
The scheme was launched in December 2024 and replaced the previous Prompt Payment Code.
It is administered by the Office of the Small Business Commissioner (OSBC) on behalf of the Department for Business and Trade.
Unlike a system that simply asks companies to commit to better payment behaviour, the Fair Payment Code requires applicants to provide evidence of their actual payment performance.
Businesses can receive one of three awards:
Each award reflects how quickly a business pays its supplier invoices.
The Code also requires participating businesses to follow principles of clear, fair, and collaborative relationships with suppliers.
Participation is voluntary and free of charge.
Late payments can create significant financial difficulties for businesses, especially smaller companies with limited cash reserves.
A business may deliver products or services successfully but then wait weeks or months to receive payment.
During this period, it must continue covering expenses such as employee salaries, rent, taxes, and supplier invoices.
Long payment delays can create a chain reaction across the economy.
When one business receives payment late, it may struggle to pay its own suppliers on time.
The Fair Payment Code was introduced to encourage businesses to improve their payment behaviour and strengthen the financial resilience of UK supply chains.
Its main objectives include improving payment times, promoting responsible commercial relationships, increasing transparency, and recognising businesses that demonstrate reliable payment practices.
The Fair Payment Code operates through a tiered award system.
Businesses apply for an award based on their existing payment performance.
Applicants must provide supporting evidence demonstrating that they meet the relevant criteria.
The Office of the Small Business Commissioner reviews the application, payment information, and supplier references.
Successful applicants receive a Gold, Silver, or Bronze award.
The award can be used to demonstrate the organisation's commitment to fair payment practices.
Awards are valid for two years, after which businesses must reapply.
This approach encourages organisations to maintain good payment performance rather than simply making a one-time commitment.
The Fair Payment Code recognises different levels of payment performance.
The Gold Award is the highest level of recognition.
To qualify, a business must demonstrate that it pays at least 95% of its invoices within 30 days.
This standard applies to invoices from suppliers generally, rather than only small businesses.
Gold recognition demonstrates a strong commitment to prompt payment.
The Silver Award recognises businesses that pay at least 95% of their invoices within 60 days while also paying at least 95% of invoices from small business suppliers within 30 days.
For the purposes of the Code, a small business supplier is generally one with fewer than 50 employees.
The Silver Award encourages larger organisations to recognise the financial pressures faced by smaller suppliers.
The Bronze Award recognises businesses that pay at least 95% of supplier invoices within 60 days.
It provides an entry point for organisations seeking to demonstrate fair payment practices while working towards faster payment performance.
Businesses can improve their systems and subsequently apply for a higher award.
In addition to meeting payment performance requirements, participating businesses must commit to three principles.
Businesses should establish transparent payment terms and communicate them to suppliers.
Payment conditions should be agreed before work begins and recorded in clear contractual documentation.
Suppliers should understand when they can expect payment and what information is required to process their invoices.
Businesses should honour agreed payment terms and avoid practices that cause unreasonable payment delays.
This includes treating suppliers responsibly and avoiding the deliberate withholding of payments.
Fair payment practices help create balanced commercial relationships.
Businesses should maintain constructive communication with suppliers.
Where payment disputes arise, they should work towards resolving them promptly.
Collaboration can help prevent minor administrative issues from developing into significant financial problems.
Late payments can have consequences beyond the immediate delay in receiving money.
Businesses rely on predictable income to cover operating expenses.
When payments arrive late, cash flow becomes harder to manage.
A company experiencing delayed customer payments may struggle to pay its own suppliers.
This can spread financial pressure across the supply chain.
Businesses may need short-term finance to cover expenses while waiting for invoices to be paid.
This can increase operating costs.
Uncertain cash flow may discourage businesses from hiring employees, purchasing equipment, or expanding operations.
Persistent late payments can contribute to financial distress, particularly for businesses operating with limited reserves.
The Fair Payment Code seeks to address these problems by encouraging more predictable payment behaviour.
The Fair Payment Code can benefit smaller suppliers in several ways.
Businesses purchasing from suppliers may improve their payment procedures to meet the Code's requirements.
Clearer payment terms can help suppliers forecast incoming funds and manage cash flow.
Businesses that communicate openly and pay reliably can develop stronger commercial relationships.
Prompt payments may reduce the time suppliers spend chasing overdue invoices.
When suppliers receive payments on time, they are better positioned to meet their own financial obligations.
However, the Code does not guarantee that every invoice will be paid within a particular period, nor does it replace a supplier's contractual or legal rights.
The Code also provides advantages for businesses applying for recognition.
An award provides evidence that a business has met specified payment performance standards.
Suppliers may feel more confident working with organisations that demonstrate a commitment to prompt payment.
Good payment practices can contribute to a positive commercial reputation.
Preparing an application can encourage businesses to review their invoice approval, procurement, and payment procedures.
Reliable payment behaviour can help businesses establish lasting supplier relationships.
The Fair Payment Code is open to eligible businesses and organisations of different sizes.
Applicants must have a UK registered office and be able to demonstrate that they meet the relevant award criteria.
Eligible organisations may include private companies, charities, community interest companies, universities, cooperatives, and business representative organisations.
Government departments and public sector bodies are not eligible for the Code because they are subject to separate public procurement payment requirements.
Businesses should check the current eligibility guidance before applying.
No. The Fair Payment Code is a voluntary scheme.
Businesses are not generally required to join the Code simply because they operate in the United Kingdom.
However, participation may be attractive to organisations seeking to demonstrate responsible supplier payment practices.
It is important to distinguish the voluntary Fair Payment Code from legally binding obligations concerning commercial payments.
Businesses may have separate responsibilities under contract law, late payment legislation, and applicable payment reporting requirements.
The application process is administered by the Office of the Small Business Commissioner.
Businesses should assess their existing payment performance and determine which award level they are eligible for.
Applicants must gather records demonstrating how quickly they pay supplier invoices.
The evidence should cover the required reporting period and distinguish small business suppliers where necessary.
Applicants must provide references from suppliers in accordance with the relevant award requirements.
These references help support the assessment of actual payment behaviour.
Businesses can express their interest by emailing:
fpc@smallbusinesscommissioner.gov.uk
The team provides application documentation, guidance, and an evidence checklist.
The completed application and supporting documents are submitted for assessment.
The Office of the Small Business Commissioner reviews the application and may request additional information.
Successful applicants receive the relevant Fair Payment Code award.
The award is valid for the applicable period, and businesses must reapply to maintain their recognition.
Applicants must demonstrate that they meet the payment performance criteria for their chosen award.
Evidence requirements can include:
The Office of the Small Business Commissioner generally requires at least six months of payment performance data.
The exact evidence required depends on the award category.
Businesses should review the official application guidance before submitting their documents.
Fair Payment Code awards are valid for two years.
Businesses must reapply when their award period ends.
The main application window runs from September to December, with successful applicants normally receiving awards for the following two calendar years.
Applications can also be considered outside this period, although the award duration may be shorter.
The renewal process helps ensure that businesses continue meeting the required standards.
Yes. The Fair Payment Code is designed to encourage continuous improvement.
A business that initially qualifies for Bronze may improve its invoice approval and payment procedures.
Once it can demonstrate that it meets the Silver or Gold requirements, it may apply for a higher award.
This structure recognises progress while encouraging businesses to work towards faster supplier payments.
Businesses seeking to improve payment times should review their existing financial and administrative processes.
Payment conditions should be established before goods or services are supplied.
Contracts should explain payment deadlines and any relevant invoicing requirements.
Invoices should be reviewed and approved without unnecessary delays.
Digital invoicing can help businesses monitor outstanding payments, identify overdue invoices, and reduce manual administration.
Accounting systems can be used to track invoice due dates and support timely payments.
Businesses should forecast their financial commitments and ensure that supplier payments are considered in cash flow planning.
Disputes should be communicated clearly and addressed promptly.
Regular reporting can help identify recurring delays and opportunities for improvement.
The Fair Payment Code replaced the earlier Prompt Payment Code.
Both initiatives sought to encourage better supplier payment practices.
However, the Fair Payment Code introduced a more structured recognition system.
Its main differences include:
These changes are intended to make recognition more meaningful and encourage measurable improvements.
The Office of the Small Business Commissioner is an independent public body established to address late payments and unfair payment practices affecting smaller businesses.
Its responsibilities include promoting fair payment behaviour and supporting eligible small businesses experiencing payment disputes with larger customers.
The Office also administers the Fair Payment Code.
It assesses applications, reviews supporting evidence, and oversees the award system.
The Fair Payment Code is one element of the Commissioner's wider work to improve payment practices across the UK economy.
The Fair Payment Code is voluntary, while certain commercial payment obligations are established by law.
Under the Late Payment of Commercial Debts (Interest) Act 1998 and related legislation, eligible businesses may have rights to statutory interest and compensation when qualifying commercial debts are paid late.
The application of these rights depends on the contract and relevant legal circumstances.
Separately, certain large UK businesses are required to report information about their payment practices and performance.
The Fair Payment Code complements these legal frameworks by encouraging businesses to demonstrate payment standards that meet its award criteria.
It does not replace contractual obligations or statutory rights.
The UK government has pursued several measures to improve business payment practices.
These include the Fair Payment Code, payment reporting requirements, and the work of the Office of the Small Business Commissioner.
In May 2026, the government introduced the Small Business Protections Bill, proposing additional measures to address late payments.
The proposals included stronger enforcement powers for the Small Business Commissioner, restrictions on lengthy payment terms, and further protections for smaller businesses.
As legislative proposals may change during parliamentary consideration, businesses should check the status of the legislation before treating proposed requirements as law.
The Fair Payment Code is a voluntary government-backed scheme recognising businesses that demonstrate fair and prompt payment practices.
It is administered by the Office of the Small Business Commissioner on behalf of the Department for Business and Trade.
The Code was launched in December 2024.
Yes. There is no application fee or ongoing membership charge.
Gold recognises payment of at least 95% of invoices within 30 days. Silver recognises payment of at least 95% within 60 days, including at least 95% of small supplier invoices within 30 days. Bronze recognises payment of at least 95% within 60 days.
No. Participation is voluntary.
Yes. Eligible businesses of different sizes can apply if they meet the relevant requirements.
Yes. The official eligibility criteria require applicants to have a UK registered office.
Awards are valid for up to two years, subject to the applicable award period.
Yes. Businesses can improve their payment practices and apply for a higher award.
No. The Code recognises demonstrated payment performance against its criteria, but it does not guarantee that every individual invoice will be paid within 30 days.
Yes. Award status can be affected if a business fails to maintain the required standards or comply with the Code's principles.
Businesses can contact the Fair Payment Code team at fpc@smallbusinesscommissioner.gov.uk to request application guidance.
No. It is a voluntary initiative that operates alongside existing legal obligations and statutory payment protections.
It encourages larger and smaller organisations to adopt payment practices that support healthier cash flow and stronger supplier relationships.
Late payments can undermine business stability, disrupt cash flow, and create unnecessary financial pressure throughout supply chains.
The UK Fair Payment Code provides a framework for recognising organisations that demonstrate responsible supplier payment practices.
Through its Gold, Silver, and Bronze awards, the Code encourages businesses to pay invoices promptly, communicate clearly, and maintain fair relationships with suppliers.
For smaller businesses, improved payment behaviour can support more predictable cash flow and reduce the administrative burden of chasing overdue invoices.
For businesses applying for recognition, the Code offers an opportunity to demonstrate financial responsibility, improve internal processes, and strengthen supplier confidence.
The Fair Payment Code is an important step towards building a UK business environment where prompt payment, transparency, and responsible commercial relationships become standard practice.
Businesses that want to improve their payment performance should review their current procedures, establish clear supplier payment terms, and consider whether they meet the criteria for a Fair Payment Code award.
