From April, if large and limited companies fail to report on their payment practices, they’ll be committing a criminal offence. Does the new regulation spell the end of late payment or is it another sheep in wolf’s clothing?

The reaction from the small business sector to new regulation that will oblige large and limited companies to publicly disclose their payment practices, including how long they take to pay suppliers, has been positive. The Federation of Small Businesses, the Association of Independent Professionals and the Self Employed and Sage, the SME payroll and accounting company, have all welcomed the news.

However, you can excuse small business owners from being a little sceptical over the latest government attempt to address a problem that has long impacted investment and innovation. It is unusual for a month to go by without the publication of new figures underlining the financial burden placed on small businesses by late payment. The latest data from Bacs show that SMEs are owed an eye-watering £26.3 billion, while the Federation of Small Businesses claims that effective action on late payment could stop 50,000 companies going to the wall annually.

And it seems like every year a new figurehead takes up the matter with fresh fervour and promises action, and delivers little. Schemes have come and gone, failing to have any noticeable impact. This latest piece of regulation certainly seems to be a more powerful tool, but all eyes, in the SME sector at least, will be on how well it is enforced.

In absence of effective regulation, invoice finance has emerged as a popular means for SMEs to ease the burden of late payment as it is a direct and tangible means of safeguarding solvency. The introduction of new legislation is likely to reinforce its role as small businesses remain alert to the threat to capital and cashflow, and wary of the failure of past initiatives.

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