The Commercial Payments Bill is still a proposal
The Commercial Payments Bill reached committee stage in the House of Lords on 21 July 2026. At this stage, peers examine the Bill clause by clause and can propose amendments. It still has further stages in both Houses of Parliament before it could receive Royal Assent.¹
None of the Bill's proposed changes should be treated as law today, and its details may change. The Office of the Small Business Commissioner is making the same point in its public guidance while the Bill progresses.²
The case for action is well documented. Department for Business and Trade research estimates that late payments cost the UK economy almost £11 billion each year. It estimates that more than 1.5 million businesses are affected annually and around £26 billion is owed in late payments at any one time.³
Fresh official statistics also show that the issue persists even as some measures improve. In 2025, large businesses reported a median payment time of 32 days, while 15% of invoices and 14% of total invoice value were paid late. These figures come from self-reported data that is not independently verified, so they are best read as an overall indicator rather than a complete account of every supplier's experience.⁴
What the Commercial Payments Bill proposes
The introduced Bill would make several substantial changes to business-to-business payment rules. The government's overview says it would:
- impose a maximum payment term of 60 days, subject to limited exemptions;
- make late-payment interest mandatory at 8% above the Bank of England base rate;
- give suppliers a right to a fixed sum when a purchaser raises a dispute late or without enough information;
- prohibit the deduction and withholding of retentions under construction contracts;
- expand the Small Business Commissioner's powers to investigate poor payment practices, adjudicate certain disputes and take enforcement action;
- add reporting and board-level scrutiny for persistently late-paying large businesses.⁵
Some important details remain open. The government has said it intends to consult on an exemption from maximum terms for certain import and export contracts. Definitions, exemptions and implementation arrangements may also depend on later regulations. Small businesses should therefore use the introduced Bill to understand the direction of policy, while checking the final Act and guidance before changing contracts or relying on a new right.
What the law says about late commercial payments today
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. If no payment 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. Businesses can currently claim interest and debt-recovery costs in qualifying cases.⁶
The proposed Bill would tighten this position. It aims to make the 60-day limit more difficult to avoid and the statutory interest provision mandatory. It would also give the Small Business Commissioner a stronger enforcement and dispute-resolution role.
The government says the measures will have a lead-in period and will not apply retrospectively. Payments, contracts and disputes would be judged under the rules in force at the relevant time.⁵ This means an unpaid invoice today does not acquire the Bill's proposed protections simply because the legislation later becomes law.
Anyone dealing with a valuable disputed debt, an unusual contract or a customer in another jurisdiction should obtain appropriate legal or accounting advice. General guidance cannot settle how a particular agreement will be interpreted.
Six practical checks small suppliers can make now
Waiting for the final legislation does not require waiting to improve the underlying records. These checks can make payment conversations clearer under today's rules and leave the business better prepared for whatever version of the Bill is enacted.
First, create a simple register of larger customers and the terms agreed with each one. Record the payment period, the event that starts the clock, the customer's invoice requirements and the person responsible for approval. Flag terms longer than 60 days for later review, but do not assume they have already become invalid.
Second, keep evidence that the work was accepted and the invoice was received. Save the purchase order, delivery record, approved timesheet or service sign-off alongside the invoice. A clear timeline makes it easier to distinguish a genuine dispute from an administrative delay.
Third, test the customer's invoicing process before the first due date. Check the required legal name, purchase-order reference, submission portal and contact details. An invoice that cannot enter the buyer's approval process will still be difficult to collect, regardless of stronger statutory rules.
Fourth, review the public payment-practice reports of large customers. The latest official statistics are built from reports that large businesses must submit twice a year. The data has limitations, but a pattern of late payment can inform credit limits, deposits, staged billing and the amount of exposure a small supplier is willing to accept.⁴
Fifth, write down an escalation sequence. Decide when a reminder is sent, when a person follows up, who can pause further work and when the business will consider interest, debt-recovery costs or outside advice. This builds on the practical steps in our earlier guide to the cash-flow cost of late payments, while keeping each decision proportionate to the customer relationship and amount owed.
Sixth, monitor the Bill rather than rewriting every contract immediately. Recheck the parliamentary stage, the final wording, commencement dates and any official guidance. If the business regularly supplies large organisations, a focused contract review once the rules are settled may be more useful than trying to predict every amendment now.
Payment terms and payment speed are different problems
The Bill is aimed at contractual terms, poor payment practice and disputes between businesses. It cannot remove every practical delay between an approved invoice and money arriving in the supplier's account.
Once a customer is ready to pay, the method offered can still affect how much work remains. A business can send a secure payment link instead of asking the customer to copy account details and a reference manually. With Pay by Bank, the customer approves a prepared payment through their bank, and the business can receive confirmation and settlement without waiting for a card payout cycle. Our guides explain how that payment moves from approval to settlement and how instant settlement can support cash-flow visibility.
Those tools reduce friction after the decision to pay. They do not correct an inaccurate invoice, settle a genuine disagreement or compel a customer to meet the due date. Small businesses need both sides of the process: clear commercial terms and evidence before payment, then a straightforward way for the customer to complete it.
Prepare the records, then follow the legislation
The Commercial Payments Bill signals a firmer approach to late business payments, particularly where a smaller supplier has less bargaining power than its customer. Its proposed 60-day cap, mandatory interest and stronger enforcement could give suppliers clearer leverage if they survive the remaining parliamentary stages.
For now, the useful response is practical: know which contracts carry the most exposure, make invoices easy to approve, keep evidence of delivery and acceptance, and decide how overdue accounts will be escalated. Recheck the law before publication and again before relying on any new protection. Stronger legislation can support a sound payment process, but it cannot replace one.
Footnotes
- UK Parliament, current parliamentary stages for the Commercial Payments Bill [HL]. Commercial Payments Bill stages
- Office of the Small Business Commissioner, current guidance and warning that the Bill may change. Late Payments Bill: What it could mean for your business
- Department for Business and Trade, commissioned research into the scale and economic effect of late payments. Late payments research: impact on the UK economy
- Department for Business and Trade, official 2025 reporting statistics and methodology notes. Large businesses' payment practices and performance statistics 2025
- Department for Business and Trade, summary of the introduced Bill's measures, transition and non-retrospective approach. Commercial Payments Bill: overview
- GOV.UK, current general guidance on when commercial payments become late and the remedies available. Late commercial payments: charging interest and debt recovery
