Every business owner in Havering has a story about the invoice that took four months to be paid. According to the government’s own consultation, small business owners spend an average of 86 hours a year chasing late payments. Late payment is estimated to cost the UK economy £11 billion a year. For a small firm with thin margins, one big customer paying late can mean an overdraft, a delayed wage run or a missed opportunity.

What the Commercial Payments Bill does

The Bill was introduced in the House of Lords on 19 May 2026, following the King’s Speech. Its main measures are:

• A 60-day cap on payment terms for most business-to-business contracts, with limited exemptions, for example where both parties are large companies. The Bill has been amended to give ministers power to reduce that period later; government has said it hopes to move towards 45 days over time.
• Mandatory late-payment interest at 8% above the Bank of England base rate, which contracts can no longer water down or remove.
• A time limit on disputes, so customers can’t raise a quibble months later as an excuse not to pay.
• New powers for the Small Business Commissioner to investigate persistent late payers, adjudicate disputes outside court and impose financial penalties on large firms.
• A ban on retention clauses in construction contracts, which matters for Havering’s many trades and building firms.

Where it’s got to

The Bill completed its Lords committee stage in July, when 30 government amendments were agreed, and its report stage on 15 September. Third reading in the Lords was scheduled for 20 October, after which it moves to the House of Commons. It still needs Royal Assent, and implementation is expected no earlier than 2027. Details, including the exact payment period and exemptions, could still change.

You don’t have to wait

Much of your protection exists already. Under the 1998 late-payment law, businesses can already claim statutory interest and fixed compensation on overdue invoices from other businesses. Most simply don’t, for fear of upsetting a customer. The new law shifts the culture by making interest the norm. You can start acting that way now.

• Set short terms. Nothing stops you making 14 or 30 days your standard. The 60-day cap is a maximum, not a target.
• Put it in writing. Agree payment terms, the purchase order process and who approves invoices before you start work.
• Invoice immediately and correctly. Include the PO number, the right contact and your bank details. Many delays are caused by invoices bouncing around a customer’s accounts team.
• State your interest terms on every invoice. A polite line saying statutory interest applies to overdue amounts is often enough.
• Chase by day one. A friendly reminder a few days before the due date and a call on the day it’s overdue work better than a stiff letter at 90 days.
• Use the Commissioner. The Office of the Small Business Commissioner already handles complaints about larger customers. It recovered more than £1.55 million for small businesses in 2025/26.

Check your own payments too

Many Havering firms are customers as well as suppliers. If your business pays its own suppliers on 90 days, now is the time to plan for shorter terms. And when e-invoicing becomes mandatory in 2029 (see Article 5), invoices will move faster between systems, which should help everyone.