The reforms are, at bottom, a demand for finance-function precision. They require a business to know, invoice by invoice and day by day, what it is owed, when each sum fell due, what statutory interest has accrued, and — for larger firms — to publish that information twice a year with a board-level explanation if the picture is poor.

That is not a legal capability. It is a controller’s capability, and a great many British businesses in the band between micro and large do not currently have one.

What is actually being proposed

The detail matters, not least because it is still moving. The measures are not yet law and will mainly arrive through the Commercial Payments Bill, with some elements delivered by secondary legislation. On current indications, the earliest the main restrictions bite is 2027, and a transition period is expected.

Three changes carry real operational weight. First, statutory interest at base rate plus eight per cent becomes mandatory — parties will no longer be able to agree a lower rate, which removes the commercial workaround most supply contracts currently rely on. Second, payment periods beyond 60 days will be prohibited, subject to exemptions that must be expressly stated in the contract or the term is void; a proposed 45-day cap has been dropped for now. Third, large companies will have to report the total statutory late payment interest owed to suppliers and the total actually paid, on top of the existing twice-yearly payment practices reporting, with the board or audit committee required to publish an explanation and a remediation plan where a significant share of payments are late.

Enforcement is not nominal. The Small Business Commissioner will be able to impose civil fines of up to one per cent of annual UK turnover for persistent poor payment practice, direct businesses to change contracts or commission independent reviews, and make binding adjudication awards. Travers Smith’s briefing sets out the mechanics in full, including the retention-clause prohibition in construction contracts and the two-year transition attached to it.

Why this is a controller problem

Consider what compliance requires in practice.

You need a sales ledger where the due date on every invoice is correct, which sounds trivial and is not: due dates derive from contract terms that frequently live in a different system, or in a filing cabinet, or in nobody’s memory. You need to calculate accruing statutory interest at a rate that moves with the base rate. You need to make a commercial decision on each overdue account about whether to claim that interest, because claiming it against your largest customer is a relationship decision, not an accounting one. You need the same discipline on the purchase side, because the reporting obligation runs on what you pay as well as what you are paid. And you need it to be reliable every month, not reconstructed in a panic when a reporting deadline arrives.

That work sits precisely where a Financial Controller sits. It is not strategic enough for a finance director, too judgement-heavy for a bookkeeper, and too continuous to outsource to a year-end accountant. It is month-in, month-out financial control — the unglamorous discipline of making sure the ledger reflects reality.

The evidence that most firms are not ready

The current data does not suggest a business population with that discipline in place.

Xero’s figures, cited by the Small Business Commissioner, show UK small businesses waiting an average of 29.3 days to be paid as at June 2026, of which 8.3 days were beyond the due date. The contagion is the more telling statistic: Intrum’s 2026 survey found 64 per cent of UK businesses had themselves paid suppliers late because their own customers had paid them late. That is not a sector of deliberate bad actors. It is a sector managing cash by reacting to it.

The consequences are visible further down the chain. Insolvency Service figures record 1,946 company insolvencies in England and Wales in August 2026. The headline is slightly down on the year, but the composition has shifted sharply: administrations rose 60 per cent year on year to 182, and creditors’ voluntary liquidations still account for 74 per cent of the total. Across the twelve months to August 2026, roughly one company in 200 entered insolvency.

Not all of that is a control failure, obviously. But working-capital collapse rarely arrives without warning signs that somebody should have been reading — and the common factor in the cases I see is not that nobody could do the arithmetic. It is that nobody owned it.

The structural gap in the middle

Here is where the problem concentrates. There are around 5.7 million private sector businesses in the UK, of which 99.9 per cent are SMEs and roughly 8,000 are large, according to House of Commons Library analysis of the government’s business population estimates. Micro businesses account for about 95 per cent of the total. That leaves a few hundred thousand small and medium-sized firms sitting between the two extremes.

Those businesses are the ones genuinely caught by reforms of this kind. They are large enough to have complex customer and supplier terms, meaningful working capital, and in many cases a lender watching the covenants. They are not large enough for the finance infrastructure that handles it automatically. And they are the segment where a full-time Financial Controller — now typically £65,000 to £95,000 across the UK, more in London, and perhaps a fifth again once employer costs are counted — is a serious commitment against turnover of a few million.

The result is a familiar shape: a competent bookkeeper or management accountant producing accurate transactional work, an external accountant handling the year-end, a founder or managing director holding the commercial judgement, and nobody at all occupying the layer in between where control actually happens. It works until something tightens. Then it does not.

Why the answer has become fractional

The market response over the past three or four years has been to unbundle the role rather than to do without it. A Financial Controller engaged for one or two days a week, on a day rate, typically costs a business in this band somewhere between £1,700 and £5,000 a month depending on scope and seniority — against £80,000-plus fully loaded for the employed equivalent.

That arithmetic is not the interesting part, though it is what gets businesses through the door. The interesting part is that the work genuinely compresses. Financial control at this scale is perhaps eight to twelve days a month of real effort, and a chunk of that is process that can be systematised once rather than performed repeatedly. An experienced controller who has built the close discipline, the debtor cadence and the reporting pack properly can hold the function in considerably less time than the role would absorb if it were a full-time seat with a full-time seat’s drift.

It also solves a recruitment problem. Businesses at this size compete poorly for strong controllers against larger employers paying more for a narrower brief. They compete rather well for a day or two a week from someone who has deliberately built a portfolio practice and wants variety — a cohort that barely existed a decade ago and is now deep enough to recruit from seriously.

What it does not solve is anything requiring constant presence. A business in genuine distress, mid-integration after an acquisition, or carrying a fragile relationship with its lender needs someone in the building. The honest boundary is that fractional control works where the function needs ownership and fails where it needs availability, and a provider who will not tell you which side of that line you are on is not worth engaging.

What to do before 2027

The reforms are not law yet and the timetable may slip. That is an argument for preparing rather than waiting, because the preparation is valuable whatever happens to the Bill.

Three things are worth doing now. Establish whether your sales ledger holds the correct contractual due date for every live invoice — in most mid-sized firms the honest answer, when actually tested, is no. Work out what statutory interest at base plus eight per cent would have accrued across your ledger over the last twelve months, which is both a compliance rehearsal and a genuinely useful number to show a board. And decide who owns the answer. Not who produces the report: who is accountable when it is wrong.

If that person does not currently exist in your business, the question is whether the role is big enough to employ or whether it is one or two days a week of senior attention — which is the calculation a growing number of firms in this band are now making, and the reasoning behind the rise of the fractional Financial Controller. Either answer is defensible. Leaving the layer empty, a year out from rules that assume it is occupied, is the one that is not.

Adrian Lawrence FCA is a Chartered Accountant, a former listed-company Finance Director, and founder of Accountancy Capital, which recruits qualified finance professionals across the UK.

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