On 19 May 2026, the UK Government introduced the Small Business Protections Bill to Parliament, setting out plans for what it describes as the toughest crackdown on late payments in a generation.

Late payments can cause significant problems for small businesses. When customers fail to pay on time, it can put pressure on cash flow, make it harder to pay suppliers and staff, and leaves you spending valuable time chasing money you’re already owed.

The new Bill aims to strengthen protections for small businesses by tackling late and poor payment practices, particularly where smaller businesses are dealing with larger organisations.

Although the Bill is commonly referred to as the Small Business Protections Bill, its formal Parliamentary title is the Commercial Payments Bill. It’s still progressing through Parliament, meaning the proposed measures are not yet law and could be subject to change.

What changes are proposed?

Some of the key measures proposed include:

A 60-day cap on payment terms

The Bill proposes a new 60-day cap on payment terms for large businesses paying smaller suppliers.

The aim is to prevent small businesses from being forced to accept excessively long payment terms and give suppliers greater certainty over when they can expect to be paid.

Mandatory interest on late payments

The Government is also proposing mandatory interest on late payments, at 8% above the Bank of England base rate. 

This would mean there could be clearer financial consequences for businesses that fail to pay suppliers on time.

Did you know: you can already charge 8% late payment interest, even if it’s not specifically in your contract. It is currently at the discretion of you as the supplier, but the bill would make this mandatory moving forward.

Stronger powers for the Small Business Commissioner

The Bill would significantly strengthen the powers of the Small Business Commissioner.

The Commissioner could be given the power to investigate businesses suspected of poor payment practices, adjudicate certain payment disputes outside of the court process and issue financial penalties to persistent late payers.

Greater accountability for poor payment practices

The proposals would also increase accountability for large businesses with persistently poor payment records, including requiring greater transparency around their payment performance and the steps being taken to improve it.

What could this mean for your Agency?

If the Bill becomes law in its current form, it could provide greater protection for businesses that regularly experience late or unfair payment practices.

For small businesses, the potential benefits could include:

• More certainty over when invoices will be paid
• Improved cash flow
• Less time spent chasing overdue payments
• Stronger options for resolving payment disputes
• Greater protection when dealing with larger businesses

For larger businesses, the changes could mean reviewing existing supplier payment terms and internal payment processes to ensure they comply with the new rules once they come into force.

What should you do now?

As the Bill is still making its way through Parliament, there is currently no immediate action required.

However, this may be a good opportunity to review your existing payment processes and make sure you have clear procedures in place for invoicing, credit control and managing payment disputes. Services like chaser can be a great tool to use.

If managing overdue invoices and chasing payments is taking up valuable time, we also offer credit control services to help businesses stay on top of their outstanding debts and improve their cash flow. If you would like to find out more about how we can help, please get in touch with the team. 

We will continue to monitor the Bill as it progresses and share further updates when more information becomes available about the final legislation and when any changes may come into effect. You can also follow the status of the bill on the government website linked here.