The Commercial Payments Bill had its first reading on 19 May 2026. The Bill is proposed legislation aimed at improving payment practices between businesses, particularly addressing the issue of late payments. Late payment of invoices has long been a concern in many economies, as it can create cash flow problems for small and medium-sized enterprises (SMEs), limiting their ability to grow and operate effectively.
Most of the changes proposed will be achieved by making changes to the Late Payment of Commercial Debts (Interest) 1998. At its core, the Bill seeks to promote fair, transparent, and timely payment practices in commercial transactions. One of its key objectives is to ensure that larger organisations meet their financial obligations to smaller suppliers within agreed payment terms. Contractual payment terms exceeding 60 days will be unenforceable unless exemptions apply. Mandatory interest at a rate of 8% above the Bank of England base rate will be brought it – good news for sellers and service providers, but potentially a pricey issue for purchasers if their internal payment process is not tightened.
This Bill should be monitored closely by businesses and perhaps consideration given to it if entering into long term contracts which could be effected, inevitably, when, this comes in to force.
Overall, the Commercial Payments Bill represents an effort to create a more balanced commercial environment. By tackling late payments and promoting accountability, it aims to strengthen business relationships, improve cash flow for SMEs, and contribute to a healthier and more resilient economy.