Late payment reforms 2026: what small businesses should do now

UK Parliament published an update on 16 October 2026 announcing that the Commercial Payments Bill is scheduled for its House of Lords third reading on 20 October. For small suppliers waiting to be paid, it is a development worth following.

What is being proposed?

The government’s bill overview describes proposals including maximum payment terms of 60 days, subject to limited exceptions, mandatory late-payment interest and stronger powers for the Small Business Commissioner. Construction retention practices are also within the bill’s scope.

These are proposals progressing through Parliament. The announced third reading is a future stage as this article is published. It does not mean the reforms are already in force. Final wording, commencement dates and implementation arrangements still matter.

Improve the process you control today

A better invoice routine cannot eliminate every late payment, but it can remove avoidable delays. Before starting work, agree the scope, price, payment schedule and the customer’s purchasing requirements in writing.

Ask who approves the work, who receives the invoice and whether a purchase order is needed. The person who commissions a job may be different from the person who releases payment.

Make invoices easy to process

• Use a clear invoice number and describe the work supplied.
• Show the agreed payment due date clearly.
• Include the correct customer details and any required purchase-order reference.
• Check that bank details and contact information are accurate.
• Send the invoice through the customer’s agreed channel and keep a copy.

Our UK invoice guide provides a starting point for checking the document itself.

Create a repeatable follow-up routine

Set reminders before and after the due date. Keep the first message short: identify the invoice, amount, due date and the action you need. Ask whether there is a specific problem preventing payment.

If a customer says the invoice is awaiting approval, ask who owns that approval and when it will happen. Record promised payment dates so that the next conversation starts with the facts rather than a fresh search through your inbox.

Separate a disputed invoice from an undisputed overdue one. If the customer questions the work, document what is disputed and what would resolve it. Keep records of delivery, acceptance and relevant correspondence.

Know when to seek help

For persistent problems, consult the Small Business Commissioner’s current guidance or obtain advice on the options available in your circumstances. Check existing rights before adding interest or taking formal action; do not rely on proposed reforms as though they already apply.

Keep a weekly list of overdue balances and consider how dependent your cash flow is on one slow-paying customer. Chasing a large unpaid invoice is also a planning issue for the next payroll or supplier payment.

Your next step: review your five oldest unpaid invoices, identify the next action for each, and set a date to check progress.

Information checked on 16 October 2026. This is general business information; check current official guidance for your circumstances.