Britain’s proposed late-payment reforms would introduce a 60-day limit for many business contracts and give the Small Business Commissioner stronger enforcement powers. The Commercial Payments Bill completed its House of Lords report stage on 15 September, with third reading scheduled for 20 October.
The parliamentary timetable leaves further scrutiny ahead. The measures are not yet law, and the proposed limits would be subject to exemptions and commencement arrangements.
Research commissioned by the government and the commissioner in 2025 estimated that businesses were owed £26 billion in overdue payments at any given time. It put the annual cost to the UK economy at almost £11 billion. The first figure measures outstanding money; the second estimates the wider economic cost.
Payment deadlines would become harder to override
The bill as amended on report provides for maximum payment periods of 60 days for covered private-sector contracts and 30 days where the purchaser is a public authority. It would also restrict contract terms that remove statutory interest on late payment.
The commissioner would gain an adjudication scheme, a process for deciding eligible payment disputes, alongside powers to investigate poor payment practices and impose financial penalties in specified circumstances.
For suppliers, the delay between completing work and receiving money can leave wages, rent and their own invoices falling due first. As we explained in our coverage of profitable businesses running short of cash, recording a sale does not put the payment in the bank.
The bill also contains measures to prohibit construction retentions in Great Britain, sums held back from contractors’ payments, with transitional arrangements. Businesses should not treat the proposed ban as already operating.
Reported payment performance has improved
Official statistics for 2025 put large businesses’ payment time at 32 days, compared with 35 days in 2018. The reported late-payment proportion fell from 25% to 15%, a reduction of 10 percentage points.
These headline statistics use medians across valid reports. They do not mean that exactly 15% of every invoice issued throughout the UK economy was paid late. Reporting thresholds also changed in 2025.
Manufacturing had the longest payment time in the sector comparison, at 45 days. The findings show that progress in the headline figures can coexist with longer waits in particular industries.
Enforcement resources remain part of the debate
The bill has received cross-party backing, although peers have questioned the length of the proposed limit, exemptions and the commissioner’s resources.
The House of Lords Library’s account of the debate records Conservative peer Lord Hunt of Wirral saying that “the success of these reforms will depend ultimately on resources”. Liberal Democrat peers have argued for shorter payment periods.
In a June letter described by the library, government minister Lord Leong said the commissioner would receive additional resources for the new functions. The bill’s passage, implementing regulations and funding will determine when suppliers can use the proposed powers.
