New late payment rules are moving through Parliament. The Commercial Payments Bill had its first reading in the House of Lords on 19 May 2026, with a second reading due on 9 June. It follows the government’s response to its late payment consultation in March. The aim is a regime the government calls the toughest in the G7.
This matters because late payment is a survival issue, not an admin one. Late payments cost the UK economy an estimated £11 billion a year. They contribute to around 14,000 business closures annually. If you invoice larger customers, or you are the larger customer, the changes reach you.
Here’s what’s coming, and why it’s worth getting ahead of.
What the New Late Payment Rules Do
The Bill builds on the 1998 late payment legislation, which is now more than 25 years old. It hands real teeth to the Small Business Commissioner and pulls payment behaviour up to board level.
The headline measures are significant:
- Maximum payment terms: a 60-day cap on B2B payment terms, with strictly limited exemptions.
- Interest on late payments: charged at 8% above the Bank of England base rate.
- A fixed sum for late disputes: suppliers gain a right to a set payment where a purchaser raises a dispute late or without enough information.
- Power to fine: the Commissioner could levy penalties of up to 1% of UK annual turnover on large companies that persistently pay late.
- Board-level scrutiny: persistently late-paying large companies could have to publish commentary, through their board or audit committee, on why and what they’ll do about it.
Implementation timing is still to be consulted on. The direction, though, is clearly toward shorter terms and far more accountability.
Who Counts as “Large” Here
The reporting and board-level duties fall on large companies. So the first question is which side of that line you sit.
A company is large if it exceeds at least two of these three limits: turnover above £54 million, balance sheet total above £27 million, or more than 250 employees. Sit below two of the three and you’re not large for this purpose. These are the same thresholds that already drive payment-practices reporting, raised from 6 April 2025.
For a group, the test looks at the group as a whole, not just the UK entity. So a UK subsidiary can be modest in isolation and still count as large because its worldwide group breaches the limits. That catches many subsidiaries of overseas parents.
Who This Reaches
This isn’t only a shield for small suppliers. It’s a duty for larger ones too.
If you’re an SME chasing slow-paying customers, the new enforcement powers are meant to work in your favour. If you’re the larger business in the chain, including many UK subsidiaries of overseas groups, you may face the reporting and board-level obligations. Plenty of companies sit on both sides at once.
The point is that payment behaviour is becoming a governance matter, with financial and reputational consequences attached.
Why This Is Harder Than It Looks
On the surface, faster payment is simply good news. Underneath, the change asks real questions of how you run the business.
Cash flow is the first. If your customers must pay you sooner, your forecasting improves. But if you must pay your suppliers sooner, your working capital tightens, and the timing of those two shifts rarely lines up neatly. Modelling that gap matters.
Contracts are the second. Terms beyond the 60-day cap will need renegotiating, and your invoicing and dispute processes have to stand up to a statutory timeline. The third is reporting. If you’re a large company, payment performance is heading into your Directors’ Report, where it sits alongside your audited figures and invites scrutiny.
None of this is a form-filling exercise. It touches your cash position, your contracts and your governance at the same time.
Who Should Be Paying Attention
If late payment already strains your cash flow, this is the moment to tighten the basics and plan for the change.
It matters most if a few large customers dominate your sales ledger. It matters if you’re a UK subsidiary that will carry the reporting duty as the larger party. And it matters if your forecasting is already stretched, because the timing shifts will land whether or not you’re ready.
The businesses that cope best won’t be the ones that react when the rules commence. They’ll be the ones that modelled the impact early.
How Hamlyns Can Help
We help you turn payment behaviour into a number you can plan around. That starts with understanding where your cash is tied up and what the new rules change.
We build cash flow forecasts that model faster receipts and faster payments together. We review your payment terms and credit control with you. We help larger companies get reporting-ready for the board-level obligations. And we keep the focus on what protects the business, not just what satisfies a rule.
If late payment is squeezing your cash flow, or you want to understand how the new regime affects you, please get in touch with the Hamlyns team. You can also read our guide to tax and cash flow strategies to grow your SME, or explore our business services. We’ll give you a clear, practical view in plain English.
