Invoicing & Getting Paid · Polar Small Business Update
UK late-payment rules 2026: what the new Bill could mean for small businesses
New legislation is intended to strengthen payment rights for small suppliers. Here is what is proposed, what has not changed yet, and what you can do now to protect cash flow.
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The UK’s proposed late-payment reforms would introduce stronger limits and enforcement around business-to-business payment terms. Official analysis describes a planned 60-day maximum term, non-waivable interest and greater powers for the Small Business Commissioner. The Bill is still proposed legislation, so your immediate job is to keep clear terms, issue accurate invoices promptly and chase overdue debt consistently.
What has been announced?
The Office of the Small Business Commissioner says the proposed legislation is designed to create the strongest commercial-payment framework among major economies. The package described by the Commissioner includes:
- a mandatory maximum payment term of 60 days;
- statutory interest that cannot simply be signed away;
- more accessible ways to challenge late payment; and
- stronger investigation and enforcement powers for the Small Business Commissioner.
These measures are not yet a substitute for your current contract, invoice process or debt-chasing routine. Until legislation is enacted and commencement dates are confirmed, businesses should continue to follow the rules and remedies already in force.
Why this matters
Late payment is a cash-flow problem, not just an administrative irritation. The Commissioner reports that around £26 billion in overdue invoices is owed to UK small businesses at any one time. Separate official payment-practice statistics show improvement among large businesses: 15% of invoices were reported late in 2025, compared with 25% in 2018. However, sector differences remain and manufacturing has continued to report longer payment times.
What small businesses should do now
1. Tighten the quote
State the price, due date, deposit, milestones and late-payment position before work begins. Ask the customer to confirm who must approve the invoice.
2. Invoice without delay
Send the invoice as soon as the agreed trigger is met. Include the purchase-order number, legal business details and a clear payment reference.
3. Track the ageing
Review unpaid invoices weekly. Separate invoices that are not yet due, newly overdue and seriously overdue so the next action is obvious.
4. Escalate consistently
Use a written reminder sequence and keep a record of contact. If a larger customer pays slowly, check its published payment-practice reports.
A simple seven-day action plan
- List every open invoice with its value and due date.
- Correct any invoice missing a PO number, contact name or payment details.
- Send reminders for all overdue items today.
- Add a 13-week cash-flow forecast that reflects realistic payment dates.
- Review your standard terms before issuing the next quote.
- Check the Small Business Commissioner’s guidance and interest calculator before escalating.
- Reassess credit limits for customers who repeatedly pay late.
How Polar can help
Polar’s practical guides can help you turn the announcement into a working routine:
The Polar view
Stronger legislation should help, but the best protection still begins before the invoice is overdue. Clear terms, fast invoicing, accurate customer details and a repeatable follow-up process reduce surprises and give you better evidence if a dispute needs to be escalated.
Official sources
This article is general information, not legal or financial advice. Proposed legislation can change before it becomes law. Check the latest official guidance or take professional advice for your circumstances.