Supplier payments: the 30-day question in a 60-day bill

Late invoices are not just annoying admin. For a small firm, they can mean a missed wage run, a delayed tax bill, or the owner quietly becoming the bank for a much bigger customer.

That is the backdrop to the Commercial Payments Bill [HL], now in Committee stage in the Lords. It is aimed at a simple problem with awkward details: how quickly should businesses be made to pay each other?

What the Bill would actually do

The public question is neat: should large companies pay small suppliers within 30 days?

The Bill, as it stands, does not set a 30-day cap for private-sector contracts. It would set a 60-day maximum payment term for many private commercial contracts. Public authorities would have to pay within 30 days.

It would also make late-payment interest mandatory, at 8% above the Bank of England base rate, and give the Small Business Commissioner stronger powers to deal with payment disputes and poor payment practices. In construction, it would ban retention clauses, which allow clients to hold back part of the payment until later.

So the live question is really sharper than the slogan: is 60 days a practical ceiling, or should Parliament push big buyers closer to 30 days when dealing with small suppliers?

Why small firms are pushing hard

The numbers explain the impatience. Government and parliamentary briefings say 44% of SME invoices are paid late. Late payment is estimated to cost the UK economy about £11bn a year. Around 14,000 businesses — 38 a day — are said to close annually because of late payment.

In the government consultation, which had 867 responses, 66% supported stricter maximum payment terms. But among smaller firms that objected, the complaint was often that 60 days was still too long. Some argued 30 days would be more appropriate.

Support was even stronger for enforcement measures: 89% backed fines for persistent late payers, 80% supported mandatory statutory interest, and 76% supported expanded Small Business Commissioner powers.

The mood: supportive, with warnings attached

This is not a sharply tribal Westminster row. Labour is sponsoring the Bill. Conservative front-bench peers have said they do not oppose it, while warning that large firms might avoid small suppliers or treat 60 days as the new normal. Liberal Democrat peers have also welcomed the main provisions.

Business groups are mostly positive too. The Federation of Small Businesses has called the legislation an historic moment. The Institute of Directors says action is long overdue, while warning against watering it down. The CBI is more cautious, arguing that prompt payment rules must be balanced against the realities of large supply chains.

There is also an international nudge here. The Netherlands uses a 30-day cap when large companies pay small suppliers. The UK package, though, would combine a 60-day cap with non-waivable interest and stronger enforcement.

That leaves Parliament with a very practical choice: faster cash for small firms, or a compromise ministers think is more workable across sectors.

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