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The government calls its late-payment legislation the Small Business Protections Bill. The parliamentary record continues to list it as the Commercial Payments Bill. It is still a Bill, not law.
As checked on 4 August 2026, the Bill had completed committee stage in the House of Lords. The current parliamentary version is HL Bill 45, as amended in Committee. It must complete further stages in both Houses and receive Royal Assent before becoming an Act. Commencement may follow later.
What the Bill proposes
The government's published material describes measures including:
- a 60-day cap on payment terms for large firms paying smaller suppliers, subject to the final wording and any exemptions;
- mandatory late-payment interest at 8% above the Bank of England base rate;
- stronger powers for the Small Business Commissioner to investigate payment practices, adjudicate disputes and take enforcement action;
- action on retention clauses in construction contracts;
- greater board or audit-committee scrutiny for persistently late-paying large businesses.
These are proposals in a Bill. Amendments, regulations, commencement dates and official guidance can affect how any final duties work. A supplier should not treat a proposed right as available today.
What the current law says
Current GOV.UK guidance says an agreed payment date must usually be within 60 days for a business transaction, although a longer period can be agreed if it is fair to both businesses. Where no date has been agreed, a payment generally becomes late 30 days after the later of the customer receiving the invoice or the goods or service being delivered.
Qualifying businesses may currently be able to claim statutory interest and debt-recovery costs. The facts depend on the contract and circumstances. A valuable disputed debt, cross-border arrangement or unusual term may need legal or accounting advice.
Six checks a small supplier can make now
- Record every customer's terms. Note the due date, what starts the clock and who approves the invoice.
- Keep evidence of delivery and acceptance. Store purchase orders, timesheets, delivery records and sign-offs with the invoice.
- Test the invoicing process. Confirm the legal name, purchase-order reference, portal and contact before the due date.
- Review payment-practice reports. Large-business reporting can provide useful context, while remaining self-reported evidence.
- Define an escalation sequence. Decide when reminders, personal follow-up and professional advice become appropriate.
- Monitor the legislation. Check the final wording, commencement and guidance before changing contracts or relying on a new protection.
Payment terms and payment method solve different problems
The Bill addresses contractual terms and late-payment practice. A payment method cannot make a customer approve a disputed invoice or pay before the due date.
Once a customer is ready to pay, a prepared payment link can reduce manual entry. Pay by Bank can provide a direct approval journey and useful payment status. See how the stages work. These tools reduce payment friction, but they do not replace accurate invoices, agreed terms or evidence.
