Commercial Payments Bill 2026: What It Could Mean for Freelancers & Small Businesses
The Bill proposes major changes to UK business payment practices, but its measures are not yet in force.
On 24 March 2026, the UK government published its consultation response, and in May it introduced the Commercial Payments Bill to Parliament. The proposed measures aim to tackle a late payment problem that the government estimates costs the economy estimated £11 billion every year and forces 38 businesses to close every single day. For freelancers, sole traders, and small businesses, the Bill could be significant if and when its measures come into force.
Status: Bill Before Parliament — Not Yet in Force
The Commercial Payments Bill was introduced in May 2026. The government has not confirmed commencement dates and says it will provide a lead-in and transition period. The measures will not apply retrospectively.
The Four Pillars of Reform
1. 60-Day Payment Cap
Large businesses will be legally required to pay smaller suppliers within 60 days of receiving a valid invoice. Any contractual term imposing a longer payment period will be unenforceable. This directly targets the common practice of large corporations dictating 90-day or even 120-day terms to suppliers who have little negotiating power.
2. Mandatory Statutory Interest
Statutory interest at 8% above the Bank of England base rate will become truly mandatory. Under the current Late Payment of Commercial Debts (Interest) Act 1998, businesses technically have the right to charge interest - but many contracts include clauses that waive or reduce it. The reforms will make such clauses void. You cannot be asked to sign away your right to interest.
The 3.75% Bank Rate on 30 June 2026 applies as the reference rate from 1 July to 31 December 2026, giving an annual statutory rate of11.75% for eligible debts becoming late in that period.
3. 30-Day Dispute Deadline
Clients will have 30 days from receiving an invoice to raise any dispute. If they fail to notify the supplier of a genuine dispute within that window, the invoice is deemed accepted and full payment becomes due. This prevents the all-too- common tactic of raising spurious disputes weeks or months after receiving an invoice as a way to delay payment.
4. Small Business Commissioner Enforcement Powers
The Small Business Commissioner (SBC), previously a largely advisory role, will gain real teeth. The SBC will be empowered to:
- Investigate complaints about late payment practices
- Adjudicate disputes between suppliers and large businesses
- Issue binding financial penalties against businesses that systematically pay late
This transforms the SBC from a mediator into a regulator with the authority to punish persistent offenders.
Why This Matters: The Scale of the Problem
UK Late Payment Crisis in Numbers
- • Late payments cost the UK economy £11 billion annually
- • 38 businesses close every day due to cash flow problems caused by late payment
- • The average UK small business is owed £22,000 in overdue invoices at any given time
- • 1 in 4 UK invoices are paid late
- • Small businesses spend an average of 1.5 hours per day chasing payments
Late payment is not a minor inconvenience - it is a systemic drain on the UK's small business sector. When a freelancer or sole trader doesn't get paid on time, the consequences are immediate and personal: rent goes unpaid, tax bills pile up, and the stress of chasing money replaces the work they actually want to do.
How This Affects Freelancers and Sole Traders
If you invoice businesses as a freelancer or sole trader, these reforms are directly relevant to you. Here's what changes in practice:
Your invoices must be paid within 60 days
No more accepting 90-day or 120-day terms from large clients. If you supply a large business, 60 days is the legal maximum. This alone could transform cash flow for thousands of freelancers.
You can always charge interest - no exceptions
Even if your contract says otherwise, statutory interest at 8% + base rate applies. Clients can no longer include "no interest" clauses in their standard terms.
Disputes can't be used to stall payment
Clients have 30 days to flag a genuine issue. After that, the invoice stands. This eliminates the tactic of raising vague "quality concerns" months later to justify non-payment.
You have somewhere to escalate
The Small Business Commissioner can now investigate and penalise late payers on your behalf. This is a realistic enforcement route that doesn't require expensive legal action.
What You Should Do Now
While the legislation hasn't been enacted yet, you can prepare today:
- Review your payment terms - ensure they reference the Late Payment of Commercial Debts Act and include your right to charge interest
- Start tracking overdue invoices properly - know exactly which invoices are overdue and by how many days
- Calculate what you're owed - use a late payment interest calculator to understand the interest and compensation accruing on your overdue invoices
- Set up automated chasing - systematic follow-up ensures no overdue invoice falls through the cracks
- Document everything - keep records of invoice dates, payment terms, and any communication about disputes
Get Ready for the Reforms with Experi
Experi already calculates late payment interest and statutory compensation automatically. When the reforms take effect, you'll be ready to enforce your rights from day one.
- ✓ Automatic late payment interest calculation (8% + base rate)
- ✓ Statutory compensation amounts on every overdue invoice
- ✓ Chase emails that reference the Late Payment Act
- ✓ Overdue invoice tracking with days-overdue counts
- ✓ Professional invoices with clear payment terms
Timeline and Legislative Process
The Bill is now going through Parliament. Some detail and commencement arrangements may also require secondary legislation. Confirmed milestones are:
- 24 March 2026 - Government announcement of reform package
- May 2026 - Commercial Payments Bill introduced to Parliament
- To be confirmed - Parliamentary outcome, commencement dates and transition arrangements
We'll update this page as the legislation progresses through Parliament.
Frequently Asked Questions
When do the UK late payment reforms come into effect?
The Commercial Payments Bill was introduced to Parliament in May 2026. The government has not confirmed commencement dates and says there will be an appropriate lead-in and transition period. The measures are not yet in force and will not apply retrospectively.
What is the 60-day payment cap?
Large businesses will be required to pay smaller suppliers within 60 days of receiving a valid invoice. Payment terms longer than 60 days will be unenforceable when a large business is paying a smaller supplier.
Can large businesses still contract out of statutory interest?
No. Under the reforms, statutory interest at 8% above the Bank of England base rate becomes mandatory and cannot be excluded or reduced by contract terms. Any clause attempting to waive or lower statutory interest will be void.
What happens if a client disputes my invoice under the new rules?
Clients must raise any dispute within 30 days of receiving the invoice. If they fail to dispute within that window, the invoice is deemed accepted and full payment - including any accrued interest - becomes due.
What new powers does the Small Business Commissioner have?
The Small Business Commissioner will be able to investigate late payment complaints, adjudicate disputes, and issue binding financial penalties against businesses that systematically pay late. Previously the role was largely advisory.
Do the reforms apply to freelancers and sole traders?
Yes. The reforms protect all smaller suppliers, including freelancers, sole traders, and micro-businesses, when they invoice larger businesses. The 60-day cap and mandatory interest apply regardless of your business structure.
How much is statutory late payment interest?
Statutory interest is set at 8% above the applicable Bank of England reference rate. The 3.75% rate on 30 June 2026 applies from 1 July to 31 December 2026, giving an annual statutory rate of 11.75% for that period. Eligible late commercial payments may also qualify for fixed compensation of £40–£100 depending on the debt size.
How does Experi help me take advantage of these reforms?
Experi automatically calculates late payment interest and statutory compensation on overdue invoices. You can include these amounts in chase emails and generate updated invoices showing interest owed - so you're ready to enforce your rights as soon as the reforms take effect. Sign up free to get started.
Don't wait for the law to catch up
Start charging late payment interest today. Experi calculates everything automatically so you get paid what you're owed.