The Bill introduced at First Reading on 14 May 2026 would cap UK B2B payment terms at 60 days and make 8%-above-base-rate interest mandatory on every late invoice. That is still a proposal, not settled law, but UK SME owners, credit controllers, accountants and finance directors should understand the direction of travel and review long supplier terms now.
What the rule says
As of 15 June 2026, the relevant law in force is the Late Payment of Commercial Debts (Interest) Act 1998, which gives suppliers a statutory right to interest and fixed-sum compensation on qualifying late business debts. The detailed timing depends on the contract and the Act’s rules on the “relevant day”, so it is safer to read the statute closely than rely on a loose 30-day rule of thumb.
The new Small Business Protections (Late Payments) Bill has had only its First Reading. As drafted, it proposes a 60-day cap on B2B payment terms, automatic interest at 8% above base rate on late invoices, and a stronger Small Business Commissioner with enforcement backing. All of that remains subject to amendment, government adoption and passage through Parliament.
What it means in practice
If you buy on terms longer than 60 days, treat that position as exposed if the proposal advances. A buyer paying on day 75 under a 75-day term may currently rely on the contract. If enacted in its present form, that same structure could face a hard legal limit and automatic interest once the invoice is late.
Practical step for credit teams
Review supplier contracts, purchase terms and ERP defaults now. Flag any standard term above 60 days, and note where your process assumes suppliers must actively claim interest before it is added. If the law changes, that assumption may no longer hold.
For suppliers, the practical point is different. Keep invoice dates, delivery evidence and agreed terms in clean order at Companies House and in your own records. Good paperwork makes statutory recovery easier under the current regime and under any future one.
What to watch for
The common mistake is to read a Bill at First Reading as if it were already in force. It is not. The real warning sign today is a buyer that keeps extending terms by contract and then pays after those dates anyway. That pattern already matters under the 1998 Act, and it would matter more if automatic interest and Commissioner-led enforcement were enacted.
Check any UK Ltd in 90 seconds at recoup-iq.tech/check-a-debtor.
This report is generated by the RecoupIQ News Engine based on algorithmic