Key terms in this article
What is the Small Business Commissioner?
The Small Business Commissioner is a UK statutory officer who helps small firms resolve payment disputes with larger customers. The 2025-26 reforms will give the Commissioner new powers to investigate persistent late payers and issue financial penalties.
What is statutory interest on late payment?
Statutory interest is the rate set by the Late Payment of Commercial Debts (Interest) Act 1998. It is 8% above the Bank of England base rate, plus a fixed compensation amount of £40 to £100 per invoice. Suppliers can claim it on overdue commercial debts by raising a new invoice for the interest.
What is the Fair Payment Code?
The Fair Payment Code is a voluntary UK scheme that awards gold, silver and bronze ratings based on a business’s actual payment performance. It replaced the older Prompt Payment Code in December 2024. The gold tier requires paying suppliers within 30 days.
What Was Confirmed in the King’s Speech?
The King’s Speech on 13 May 2026 confirmed the Small Business Protections (Late Payments) Bill as part of the government’s legislative programme (GOV.UK, 2026). Most of the substance is what was trailed in the Tackling Poor Payment Practices consultation response, last updated on 24 March 2026. The headline elements: a capped 60-day standard payment term, a statutory right to interest required by default in commercial contracts, enhanced powers for the Small Business Commissioner, and new reporting duties at audit-committee or board level for larger companies.
This post is a short update on our October 2025 piece on the late-payment crackdown, reflecting that the proposals are now confirmed as a Bill rather than a consultation outcome.
Key Takeaways
- Small Business Protections (Late Payments) Bill confirmed in the King’s Speech, 13 May 2026
- 60-day maximum standard payment term, with the policy intent to drop further over time
- Commercial contracts will be required to include a default right to statutory interest; suppliers still decide whether to charge it on a given invoice
- Small Business Commissioner gains powers to investigate and fine repeat offenders
- Larger companies face new board or audit-committee reporting duties on payment practices
- The Bill still has to pass through Parliament; details will move during scrutiny
- The October 2025 post covered the consultation response and is still useful background
What Changed Between October 2025 and Now
Most of the substance was settled in the consultation response, last updated on 24 March 2026. What the King’s Speech added was the legislative slot. A few specific points worth noting for resellers, based on the Government response and the King’s Speech 2026 background briefing notes:
- Bill, not law. Confirmation in the King’s Speech means the Bill is in the programme. It has not yet received Royal Assent. Implementation dates for individual measures will follow Royal Assent, often in stages.
- Board reporting, not personal liability. Earlier consultation language about “personal accountability” for finance directors was reshaped into board-level and audit-committee reporting duties. The reputational pressure is real; the personal-liability framing is not in the published Government response or briefing materials.
- Statutory interest as a contract default. The intended effect is that the right to charge statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 must be included in commercial contracts by default, rather than being negotiated away by stronger parties. The supplier still decides whether to invoke it on a given overdue invoice (GOV.UK statutory interest guidance, 2026). The change reduces room to argue the right does not exist; it does not auto-apply interest to every overdue invoice.
- Commissioner enforcement. The Small Business Commissioner moves from a complaints-handling role to one with investigative and financial-penalty powers against persistent late payers.
From our experience: the change that will land first for our customer base is the contract-level interest right showing up in renewal wording. Not because suppliers will actually start charging statutory interest (see our long-standing view that automated chasing letters work better), but because customers will notice the new clause. The first quarter after the rule takes effect will produce a wave of “what is this clause for?” support calls. Worth pre-drafting the one-line answer now.
What Is Not Changing
A few things from the October 2025 post that remain unchanged.
- The scale of the problem. The Government’s own figures cite late payment as costing the UK economy around £11 billion a year, with around £26 billion owed to small businesses at any time, around 38 small business closures a day attributable to late payment, and affected businesses losing around £17,000 on average (King’s Speech 2026 background briefing notes, 2026). Different sources give different headline numbers; every framing points to a structural problem.
- The Fair Payment Code (gold, silver, bronze) sits alongside the Bill, not in place of it. Larger customers’ Fair Payment Code rating will continue to be a relevant signal.
- The advice to small resellers stays the same: tighten your own terms, automate the dunning sequence, treat aged debt as a monthly KPI, decide your interest policy deliberately and stick to it. The October 2025 post goes through this in full.
What to Do Now
A short list.
- Watch the Bill’s progress. Pick one source you trust (GOV.UK, the Federation of Small Businesses, your trade body) and follow committee-stage updates. The 60-day cap and the statutory interest contract right are the two changes most likely to move during scrutiny.
- Brief your support team. When the new contract-default interest clause appears in renewals, customers will phone with questions. Pre-write the one-line answer.
- Review your contracts. If your standard terms still exceed 60 days for any customer segment, plan to bring them in before commencement of the new rule.
- Decide your own interest stance. With the statutory interest right baked into your contracts by default, your decision becomes whether to actively charge it on overdue invoices, hold it in reserve, or formally hold off for specific customers. Either choice is defensible; ambiguity is not. SAFE will calculate and add statutory interest to an invoice if you turn the feature on; it is off by default.
For the full background and the practical billing-platform side, see our October 2025 post on the late-payment crackdown and the billingplatform.uk post on automated late-payment chasing.
Frequently Asked Questions
What does the Late Payments Bill actually change?
The Small Business Protections (Late Payments) Bill, confirmed in the King’s Speech on 13 May 2026, sets a 60-day cap on standard commercial payment terms, requires commercial contracts to include a default right to statutory interest on overdue invoices, gives the Small Business Commissioner new powers to investigate and fine persistent late payers, and imposes new board or audit-committee reporting duties on payment practices at larger companies.
When will the 60-day payment cap come into force?
The Bill still has to pass through Parliament before it becomes law. Confirmation in the King’s Speech means it is in the legislative programme, not that it has received Royal Assent. Implementation dates for individual measures will follow Royal Assent and are likely to be staggered. Watch the Bill’s progress through committee stage for the first concrete commencement dates.
Does my business need to do anything right now?
The most useful action right now is to review your standard contract terms. If they already cap payment at 60 days or less, you are aligned. If any standard terms run longer, plan to bring them in before the new rule commences. It is also worth deciding your policy on statutory interest before the new contract-default right appears in renewal wording, so you have a ready answer when customers ask.
If you would like to talk through how this affects your own customer base or aged debt position, the contact form is the way in.