Contractors, here are the late payment fixes that the Lords just turned down

It was rightly hailed as a “big day” by the Small Business Commissioner but peers on the Commercial Payments Bill’s committee rejected four amendments. Those four interesting amendments would have significantly strengthened anti-late payment protections — or ‘late payment fixes’ — for contractors, for whom we’ve successfully pursued unpaid invoices since 1984, writes Adam Home, managing director of Safe Collections. The Lords voted down:

• Cutting the 60-day maximum statutory payment term on private contracts down to 30 days, which would have brought it in line with the public sector.
• The introduction of mandatory stage payments for small suppliers; without them, the bill has been accused of having a “blind spot” (Baroness Bowles of Berkhamsted).
• Tighter regulation of intermediary and platform payment arrangements, which would have introduced on them a seven-day payment requirement.
• Specific protections for contractors against delayed payments caused by insolvency (small business minister, Lord Leong CBE, said these would “cut across the established insolvency framework”).

Why does the missed cut from 60 to 30 days matter most?

Of the four, the missed cut to the 60-day payment cap is the one likely to sting hardest — because, as things stand, companies and clients will still legally be able to sit on a contractor's invoice for two months before falling foul of UK law.

The rejected amendment would have cut the maximum payment term on private contracts from 60 days to 30, bringing it into line with the shorter limit already used on public sector contracts.

Tony Robinson OBE, the micro-business champion behind the long-running #PayIn30Days campaign, is among those likely to be disappointed. He reflected before the Lords’ rejection:

“Many hundreds of thousands have agreed with our PayIn30days or less campaign…[and although] it’s not a supply chain issue, as most of the 5 million self-employed people and micro business owners do not supply large companies, but they/we are affected by the cash flow logjam. Our customers want to pay us within 14 days, but sometimes have to resort to ‘pay when paid’ because of the logjam.”

Why won't contractors be pleased at the other three rejected amendments to the bill?

Because each of the three would have delivered real, practical protection contractors don't currently have.

Mandatory stage payments for the private sector's small suppliers would have spared them from carrying the full cost of a contract until one lump sum at the end. And it would end the ongoing risk of many having no choice but to depend on end-of-contract invoicing.

Tighter intermediary and platform rules would have closed off a route by which payment can still be delayed further down a layered supply chain. However, the government spoke of its concern about moving to a new statutory regime for online marketplaces.

Making insolvency protections explicit would have given contractors clearer standing to recover money when a paying client collapses. That's one of the hardest scenarios in 2026/27 for a small supplier to get paid from at all.

Does it matter that four key amendments failed?

It very much matters that this quartet of amendments to the Commercial Payments Bill has fallen by the wayside, but then given my professional interest in late payments, and long-standing advocacy of legal reforms to help contractors and suppliers enforce credit control, I probably would say that.

Put it this way, UK late payment to contractors and others isn't a minor administrative headache. It's estimated to cost the UK economy £11 billion a year, and to be a factor in around 38 business closures every single day — with roughly 77% of SMEs currently owed money by late-paying customers.

That's the scale of the problem which Labour's wider anti-late payment package — introduced to Parliament in the spring of 2026 — was designed to address. At the time, the government trumpeted the Commercial Payments Bill as "the most significant legislation to tackle late payments in over 25 years."

Given claims like that, and numbers like the 38 late-paid or unpaid businesses going to the wall every day, contractors might expect Parliament to throw everything at fixing it.

What’s the good news for contractors about the bill at the committee stage?

The good news for contractors is that the bill sailed through the upper chamber with nothing but minor technical amendments at this committee stage, on July 21st 2026.

While the dropping of the four contractor-friendly amendments hurts, remember that it’s not uncommon for promising-sounding legislation to get butchered by the Lords. Post-butchering by peers, it gets sent back to the House of Commons and ends up being passed in a severely watered-down form.

So there's no unnecessary delay so far, and nothing is currently holding up these measures becoming law. Perhaps that’s because “everyone wants this to succeed”, as Ben Butler, senior policy manager at the Federation of Small Businesses, put it after the live broadcast of the committee stage. He also noticed the double-edged sword — no butchering but no boosting — remarking, “The bill effectively went through committee without any major changes and the package of measures is intact.”

Ahead of the currently unscheduled “Report stage” of the bill, Butler said that “these changes [to late payment law] can't come soon enough.”

Is there any good news on enforcement?

Yes, a little. One small amendment that carried — more a point of clarification — did catch the eye and raise a smile: the amended bill now spells out the range of investigation costs that the Small Business Commissioner (SBC) will potentially be able to recover from a late-paying business.

What costs will the SBC be able to recover?

The costs set to be potentially recoverable by the SBC’s office from errant payers include:

• Costs of follow-up enforcement action
• Monitoring an enforcement direction
• Imposing a financial penalty for breaching a direction
• Publishing an investigation report
• Administration and associated legal advice costs.

We can certainly get behind the principle that if a business pays an invoice late, they are liable for all subsequent recovery costs.

But there remain question marks around the entire issue of enforcement — and, indeed, deterrence.

Will mandatory late payment interest actually deter late payers?

Almost certainly not, for most invoices. Under the new law, as well as being liable for any recovery and enforcement costs, any late-paying company will also have to pay mandatory interest 8% above the current base rate. But unless you're talking about a five- or six-figure invoice, paid months late, the amount of interest added is negligible. For example, on a £1,000 invoice paid 30 days late, the statutory interest charge would be a mere £9.73 at current rates. That's hardly enough to convince anyone to ditch their bad late payment habit.

Is the 8% interest rate itself new? No, interest at 8% above the current base rate has actually been the default for many years, alongside liability for any recovery and enforcement costs. Companies have simply been able to get around it by writing alternative compensation provisions into contracts. The bill closes that loophole.

Will fines for late-raised invoice disputes fare any better?

Unfortunately not. The bill, in effect, proposes fining businesses £40, or 1% of the total invoice value, if they raise a dispute after a certain portion of the payment window has passed, or without providing sufficient information or evidence about the nature of the dispute — a common tactic in 2026/27 to delay payments.

This financial pinch might be sharper than the incoming statutory interest requirement, but it’s the same story; it’s hardly an amount that will turn heads or convince errant payers to mend their ways.

Can the courts and the Small Business Commissioner actually cope?

Not easily, on current resourcing. Should a firm dig its heels in and simply refuse to pay, the ultimate recourse for a contractor is the courts. But with the average claim taking almost nine months to get through the severely backlogged court system (or precisely, 36.3 weeks between Oct-Dec 2025), that shouldn’t comfort any contractor.

So there is an unanswered question of how the extra payments are actually going to be enforced.

The bill does promise to hand the SBC powers to adjudicate in more payment disputes outside the court system. But that in itself raises questions. The SBC office employs 12 people at present, yet more than 17 million invoices were overdue in Q1 2026, and 1.5 million businesses had overdue bills on their books, according to a March 28th 2026 update by R3, a business recovery body.

It’s hard to imagine a scenario where the SBC's office could be expanded to be big enough to handle this volume of cases.

What’s the latest ‘late payment advice’?

Accountants advising small businesses are already urging them not to wait for the UK’s enforcement infrastructure against late payers to catch up.

CPL Accounts, for example, has been recommending those hit by late payment to ‘review payment terms and credit control processes to improve cashflow.’ Issued at the same time as the bill making its way through Parliament, it’s sensible advice, and a reminder that specialist credit control support remains essential in the meantime.

What happens next for the Commercial Payments Bill?

Next, the bill heads to Report stage, before its Third Reading — both still in the House of Lords. Peers are currently on their summer break, though, so neither has a date yet. Once it clears the Lords, it returns to the House of Commons in the autumn, where there will still be opportunities for the bill to be strengthened.

The takeaway

As things stand, the picture for unpaid contractors remains the same as when this proposed anti-late legislation was introduced in March 2026, when ministers threatened “It’s time to Pay Up.” And it’s also when they declared the UK to be on the verge of the “most significant legislation to tackle late payments in over 25 years.”

Like ministers, then, the bill makes all the right noises about cracking down on late payment for contractors and small suppliers. But how effective it will be — in practice and without four measures to beef up its provisions and really turn up the heat on late payers — remains to be seen.