Late Payments Bill: What it could mean for your business
The government has introduced landmark legislation to tackle late payments and support small businesses across the UK.
The Commerical Payments (Late Payments) Bill proposes the most significant reforms to payment practices in over 25 years, aiming to ensure businesses are paid on time and to strengthen accountability across supply chains.
The Late Payments Bill is currently progressing through Parliament.
Details may change before it becomes law. This page will be updated as the Bill develops.
Stay informed as the Bill progresses
Why this Bill matters
Late payments remain a major challenge for businesses across the UK.
Every year, they cost the economy £11 billion and result in thousands of business closures. For many business owners, the impact is immediate, affecting whether they can pay staff, cover costs, and invest in growth.
This Bill aims to address those challenges by introducing stronger protections and clearer expectations around how businesses pay each other.
It represents what has been described as the toughest crackdown on late payments in a generation, designed to support small businesses and improve cashflow across supply chains.
Businesses spend 86 hours chasing late payments
With an average 38 businesses closing every day as a result of late payment
What is included in the Bill
60-day payment terms
The Bill proposes introducing a maximum payment term of 60 days for large businesses paying smaller suppliers, with limited exemptions.
Interest on late payments
Interest on late payments would become mandatory, making late payment no longer cost-free.
Time limit on disputes
A defined timeframe for raising invoice disputes is proposed, aiming to prevent delays caused by late challenges.
Stronger enforcement
The Small Business Commissioner would be given expanded powers to investigate, adjudicate disputes and take enforcement action.
Why this is a significant change
The Bill gives us the strongest legal framework on late payments in the G7.
It aims to:
- improve cashflow across supply chains,
- reduce the burden of chasing payments,
- support business growth and productivity,
- create a fairer and more transparent payment culture.
By reducing late payments, these reforms would help businesses focus on growth, investment and creating jobs.
What this could mean for your business:
Small Businesses
Know your rights
Greater certainty and protection
- Provide clearer expectations around when you should be paid,
- Strengthen protections against late or delayed payments,
- Improve access to support when disputes arise.
Large Businesses
Get ready
Changes to payment practices and oversight
- Change how payment terms are set and applied,
- Increase transparency around payment performance,
- Place greater emphasis on governance and accountability for payment practices.
Where the Bill is now
The Second Reading is where members debate the main principles of the Bill and consider its overall purpose before it moves to the next stage.
For more information on how a bill becomes a law follow this link