Commercial Payments Bill clears the House of Lords. What it could mean for late invoices

The government's Commercial Payments Bill, aimed at late payment between businesses, finished its stages in the House of Lords on Tuesday 20 October 2026. It now moves to the House of Commons.

Where the bill is now

According to UK Parliament, the bill had its third reading in the Lords on 20 October, with no amendments put forward, and now passes to the Commons for further scrutiny. It is not yet law.

Its long title says it is a bill "to make provision about payment terms in commercial contracts; to make provision about interest on late payment of commercial debts; to ban retention clauses in the construction sector; to expand the powers of the Small Business Commissioner in relation to payment disputes and poor payment practices".

What is proposed

As reported by SME Business News on 21 October 2026, proposals in the bill include:

• payment terms of more than 60 days being void and replaced with a shorter term
• statutory interest at 8% above Bank of England base rate becoming mandatory on late commercial debts
• new powers for the Small Business Commissioner to adjudicate payment disputes and to fine larger businesses with poor payment practices

These are proposals and may change as the bill goes through Parliament.

Why it matters

Late payment is a real problem for small firms. The government's Longitudinal Small Business Survey 2025, published on 15 October, found that 63% of SME employers offering credit said late payment was a problem in 2025. A Coface survey in September found 89% of UK companies had faced payment delays, averaging 34 days late.

What you can do today

You do not need to wait for new law. The current rules already let many businesses claim interest and a fixed sum on a late business invoice. Read our guides:

• An invoice is overdue. What should a small business do first?
• Late payment interest explained
• What is a letter before claim?

How InvoiceCollect helps

InvoiceCollect chases the debtor company for 4 weeks by email and text on working days, never more than once a day, plus a posted letter to their registered office. Your customer pays you directly and there is no commission. Start your chase.

Sources: UK Parliament, 21 October 2026; Commercial Payments Bill; SME Business News; BCR Publishing; Coface UK.