The UK is considering its biggest change to commercial payment rules in more than 25 years. The Commercial Payments Bill proposes a 60-day cap on many payment terms, mandatory interest on late payments, and stronger powers for the Small Business Commissioner.
That sounds simple. The work behind it is not.
A business may have several contract templates, different terms for large customers, missing purchase orders, and no clear record of when work was accepted. Changing one sentence on an invoice will not fix those gaps.
This guide explains what a small supplier can review now. It is general business information, not legal advice. The bill is still before Parliament as of August 27, 2026, so final rules and start dates may change.
Start with the current status, not the headline
The government introduced the bill in May 2026. Official factsheets say it would impose a maximum payment term of 60 days, with limited exemptions. They also describe interest at 8% above the Bank of England base rate and new remedies for late or weak disputes.
However, a bill is not an active law. The UK Parliament bill page showed committee-stage work and later amendments during summer 2026. Wording can move before Royal Assent. Secondary rules may add detail, and the government says businesses will get lead-in time.
Prepare the system. Do not pretend the future text is final.
Step 1: build a payment-terms map
Make one list of active customers and signed terms. Record the customer size, contract date, invoice period, payment days, acceptance step, dispute deadline, and any right to interest. Add the person who approves work and the person who releases payment.
Now flag contracts above 60 days. Flag vague phrases such as “payment after approval” when approval has no deadline. Also mark cases where the purchase order and master agreement do not match.
Use the map. It shows where cash is tied to a slow rule and where a customer can delay the clock. Link the result to your four-week cash-flow forecast so a long term becomes visible as a funding need.
Step 2: define when the payment clock starts
A term such as “30 days” is incomplete if no one knows when day one begins. It might start on the invoice date, receipt date, month end, delivery date, or customer acceptance. Those dates can differ by weeks.
Choose a clear trigger in new proposals. State how the customer receives an invoice and what makes it valid. If delivery approval is needed, name the evidence and the time allowed for review.
Keep proof in one place. Useful records include the signed order, final scope, delivery note, approval email, timesheet, portal receipt, invoice, and any credit note. Strong evidence makes both payment and a real dispute easier to handle.
Step 3: separate a dispute from a delay
A customer should not be able to say “there is an issue” and leave the full balance frozen. Your process should ask three questions:
- What exact work, amount, or term is disputed?
- What evidence supports the concern?
- When will the customer decide or pay the undisputed part?
The government overview says the proposed bill includes a fixed sum where a purchaser raises a dispute late or without enough information. The final rule may change. Even so, a clear dispute route helps today because it turns a vague block into a documented decision.
Give one person ownership. Log the date, issue, evidence, amount at risk, and next review. Then use the structured follow-up in our seven-day late-invoice plan if the due date passes.
Step 4: check the interest clause and invoice wording
Some contracts set their own late-payment terms. UK law may also give a supplier statutory rights in qualifying commercial transactions. The bill proposes stronger and more automatic treatment, but businesses should not charge a new amount based only on a news headline.
Ask a qualified adviser to compare your signed clause with current law and the final act when it arrives. Decide who calculates interest, who approves a charge, and how it appears on the account statement.
Keep customer messages factual. State the invoice, due date, principal balance, agreed terms, and source of any added amount. A clean record is stronger than an angry email.
Step 5: review customer onboarding
Payment risk begins before the first invoice. During onboarding, collect the correct legal name, company number, billing address, purchase-order rules, portal steps, accounts-payable contact, and escalation contact. Check who can approve a change.
For large jobs, consider a deposit or milestones. A final invoice for the whole project gives one delayed decision too much power. Our guide to payment terms that protect cash flow shows how deposits, milestones, and pause rules can reduce exposure.
Do not use the same risk level for every buyer. A new customer with a large order may need a credit check or a lower limit. A trusted buyer may earn more room, but its recent payment record should still be measured.
Step 6: create one approval trail
Many invoices are late because evidence lives across email, chat, a job system, and someone’s memory. Pick one place for the payment file. It does not need to be complex.
Use a checklist with the contract, order, changes, completion evidence, approval, invoice, and payment promise. Set a naming rule so another team member can find the file. Limit sensitive access, but avoid making the record depend on one person.
Test it with a real job. Can a colleague prove what was delivered and when it became payable in ten minutes? If not, repair the trail before a dispute.
Step 7: measure payment behaviour by customer
Average payment time can hide the customer causing the risk. Track each buyer’s agreed term, actual days to pay, disputed value, broken promises, and overdue balance.
Then act on the pattern. A repeat late payer may need shorter terms, a deposit, a lower credit limit, or senior approval for more work. If one buyer holds a large share of unpaid invoices, include that exposure in your customer concentration review.
Good terms are useful only when the business enforces them.
A 30-minute readiness review
| Minutes | Check | Output |
|---|---|---|
| 0–5 | List active contract templates | Owner and version for each |
| 5–10 | Find terms above 60 days | Priority customer list |
| 10–15 | Check clock-start wording | Clear trigger or gap |
| 15–20 | Review dispute and interest clauses | Questions for legal review |
| 20–25 | Test invoice evidence | Missing records and owners |
| 25–30 | Set a monthly metric review | First meeting date |
What not to do
Do not tell customers that the 60-day cap is already in force. Do not replace signed terms without checking amendment rules. Avoid copying a clause from another business when its sector, buyer size, or contract type differs.
Construction businesses should take special care. The bill also proposes action on retention payments, and the details may need separate advice. Cross-border contracts can raise another set of questions about governing law and enforcement.
Use the bill as a deadline for housekeeping, not as a shortcut around careful review.
Frequently asked questions
Is the UK Commercial Payments Bill already law?
No. As of August 27, 2026, it is still moving through Parliament. Its final wording, start date, exemptions, and transition rules may change.
What payment-term cap does the bill propose?
Government factsheets describe a proposed maximum of 60 days, with limited exemptions. Check the enacted text before changing legal terms or relying on that cap.
Should a small business change every contract now?
Start by finding long or unclear terms, weak invoice evidence, and poor dispute processes. Obtain legal advice before replacing signed terms or relying on a proposed rule.