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Co-founder Briqpay
September 7, 2026 at 08:00 AM
Late payment costs the UK economy an estimated £11 billion a year, and the government's own figures put the toll at roughly 38 small businesses closing every day because they aren't paid on time, over 1,000 a month. The Commercial Payments Bill is the government's response, described on introduction as the most significant legislation to tackle late payments in more than 25 years.
It was introduced in the House of Lords on 19 May 2026, had its second reading on 9 June, and completed Committee stage over the summer. As of late August it's at Report stage, still in the Lords, with Commons stages and Royal Assent still to come. Nothing in it is in force yet. But three of its provisions are specific enough, and close enough to becoming law, that it's worth understanding them now rather than at Royal Assent.
The headline measure is a maximum 60-day payment term between businesses, 30 days where a public authority is the buyer. If a contract doesn't specify a payment term at all, or specifies one that's void under the Bill, the law implies a 30-day term in its place. There's no negotiating around a longer window once this is in force: 60 days becomes the ceiling, not a starting point for discussion.
Under the current Late Payment of Commercial Debts (Interest) Act 1998, suppliers can claim statutory interest on overdue invoices, but contracts routinely exclude or vary that right, and most never enforce it. The Commercial Payments Bill closes that gap: interest is set at 8% above the Bank of England base rate, and any contract term that tries to exclude or vary the right to statutory interest is simply void. Businesses that have been quietly waiving interest as a condition of winning or keeping a contract lose that option.
The Bill also targets a specific late-payment tactic: buyers who sit on an invoice, then raise a dispute at the last minute as a reason not to pay. Under the new rules, a buyer has to raise any dispute at least eight days before the payment is due. Miss that window and the buyer is liable for a fixed penalty, the greater of £40 or 1% of the contract value, on top of whatever they owe.
The Small Business Commissioner has existed since 2017, but largely as an advisory and mediating body. The Bill gives it investigative powers, the ability to adjudicate disputes outside the courts, and the power to fine larger businesses for breaching the new rules, penalties reportedly capable of running into the tens of millions for the worst offenders. For context on appetite: the Commissioner recovered more money for small businesses in the past year than in the previous four years combined, under powers far narrower than these.
The Bill covers UK-to-UK business transactions, with an exemption where both parties are "large undertakings," or where the purchaser is smaller than the supplier. The catch: "large undertaking" isn't defined in the Bill itself. That threshold is left to secondary legislation, so exactly which companies sit inside and outside the exemption is still being worked out. If your business sits anywhere near that line, this is a detail worth watching rather than assuming either way.
Large companies and LLPs already have to report on their payment practices twice a year under existing rules. The Bill adds to that: secondary legislation is expected to require reporting on interest actually paid and owed, and board-level commentary at companies that persistently pay late. Reporting compliance and payment compliance are being pulled into the same spotlight.
None of this is specific to any one sales channel. It applies whether your business customers are the whole point of what you sell, or a smaller channel alongside a consumer storefront, wholesale, trade accounts, marketplace B2B orders, anywhere an invoice with payment terms exists between two UK businesses.
The practical difficulty isn't understanding the rules, it's applying them per invoice, at the moment terms are agreed, rather than working it out after the fact in a spreadsheet when a payment is already late. That's the part a checkout or invoicing system can actually help with: tracking the payment-term clock, applying the right interest automatically once an invoice goes overdue, and keeping a record of when a dispute was raised relative to the due date. It's a smaller, more mechanical problem than the legislation itself, but it's the one that actually costs time once the Bill is in force.
The Bill isn't law yet, and there's no confirmed commencement date. But "an appropriate lead-in time" is not the same as "plenty of time to start." Payment terms, invoicing templates, and any contract language that currently excludes statutory interest are all worth reviewing now, while there's still room to change them before they're tested against a law that's actively moving through Parliament rather than sitting in consultation.
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