The Late Payments Bill reaches Parliament

What has happened

On 19 May 2026, the UK Late Payments Bill was introduced in the House of Lords. Its arrival in Parliament is a significant step in a long-running policy debate, but it does not mean the proposed protections are already law. As of this brief’s date, the bill has been introduced; the measures still need to proceed through the legislative process.

The bill proposes a maximum 60-day payment term, mandatory interest at 8% above the base rate when payment is late, and powers for the Small Business Commissioner to adjudicate disputes and impose fines. The proposed cap would not apply to import and export contracts.¹ The distinction matters: an announcement of a bill is not the same as a right that an owner can already rely on. Businesses should check the bill’s progress and obtain jurisdiction-specific advice before changing contract or collection practices.

The UK government’s consultation response on late payment preceded the bill, and the Small Business Commissioner’s explanation sets out the proposal’s stated provisions. Those sources establish the policy context; they do not change the bill’s status on 21 May.¹

Why payment time is a business condition

A late invoice is not just an accounting inconvenience. When a small supplier has delivered work but has not been paid, it may have to carry wages, materials, tax and other operating costs while waiting for the buyer’s money. That can narrow the owner’s choices: delaying a supplier of their own, reducing hours, turning down work or using personal funds to keep the business moving. The consequence is especially direct for owners with little cash reserved between jobs.

The scale of small business makes this a wider economic concern. The UN estimates that micro, small and medium-sized enterprises account for about 90% of businesses, 60–70% of employment and around 50% of GDP worldwide.² The ILO describes MSMEs as responsible for about 70% of employment worldwide and says that around 80% operate in the informal economy.³ These are global estimates, not a measure of the impact of late payment. They help explain why payment practices between buyers and smaller suppliers can affect livelihoods and local economic activity well beyond one disputed invoice.

What the rules look like in different places

United Kingdom. The proposal would establish a 60-day maximum term, automatic interest at 8% above the base rate, and stronger adjudication and fine powers for the Small Business Commissioner. But, as of 21 May, these are proposed provisions in a bill introduced in the Lords—not a new deadline that suppliers can assume is already enforceable. Owners should also note the stated import and export exemption to the cap. A cross-border contract may therefore raise a different question from a domestic one, and the contract’s governing law and transaction details matter.

India. Under section 43B(h) of the Income-tax Act and section 15 of the MSMED Act, micro and small enterprises are to be paid within 45 days where a written agreement sets the period, or within 15 days without such an agreement, since 1 April 2024. The stated consequences include a restriction on the buyer’s deduction for that year and compound interest at three times the RBI bank rate.⁴ For an owner, the practical lesson is to establish whether the business qualifies for the relevant protections, keep the agreement and invoice records, and check how the rules apply to the particular buyer and transaction. The existence of a statutory remedy does not guarantee that collection will be immediate or effortless.

European Union. The proposed EU Late Payment Regulation would have set a hard 30-day cap. The European Parliament adopted a position in April 2024, but the proposal was blocked in the Council.⁵ The reported EU average B2B payment time was about 60.3 days in 2024. The proposed cap and that reported average describe different things: one is a legislative proposal, the other a reported payment pattern. Owners should not treat the proposed 30-day limit as a rule in force across the EU.

Elsewhere. Rules differ across countries represented in Reseated’s membership. Owners should check the law that applies to their location, their buyer and their contract. In cross-border work, do not assume that a home-country rule automatically governs a customer abroad—or that a contract term can remove a protection that local law makes mandatory. When the amount at stake is material, local professional advice can help clarify the available options.

What Reseated’s reports show

As of 21 May 2026, Reseated had 712 members in 49 countries and had received 1,837 reports from 50 countries. The Cashflow Council had 165 members across 39 countries and 490 reports from 46 countries. The median amount at stake in those Cashflow reports was approximately US$4,710. These figures reflect reports submitted to Reseated; they are not a census of businesses or a representative estimate of the incidence of late payment worldwide.

Within the 490 Cashflow reports, 408 described a client paying late and 82 described supplier terms. That split shows that the reports are more often about money owed to the reporting business than about terms it faces as a buyer. It does not establish that all owners experience the same pattern. The reports came from businesses with varied team sizes: 38% described a one-person operation, 41% had 2–9 people, 16% had 10–49 and 5% had 50–249.

The country counts also show why a single national story would be incomplete. The most reports came from Canada (62), the United States (61), the United Kingdom (59), India (39), South Africa (22), Spain (19), Australia (18) and Mexico (15). In the 30 days before the data snapshot, owners submitted 208 Cashflow reports. The volume and spread make recurring payment problems worth examining together; they do not prove that each report concerns the same cause, legal framework or buyer practice.

For the Council, the figures are a starting point for identifying patterns, not a substitute for the five-part pattern test: Volume, Frequency, Consistency, Spread and Corroboration. A credible response must distinguish a repeated practice from a one-off dispute, and a shared remedy from a rule that only fits one country or contract type.

The Cashflow Council’s position

The Council’s proposed direction is straightforward: large buyers should pay small suppliers within 15 days of an undisputed invoice; interest should apply automatically when payment is late; and buyers should publish their payment times. The 15-day ask is more demanding than the UK bill’s proposed 60-day maximum and the EU proposal’s 30-day cap. It is a standard for fair payment practice, not a claim that those other limits have already been adopted or that every country currently requires 15-day payment.

“Undisputed” is an important boundary. A genuine disagreement about an invoice should be addressed, but raising an objection should not become a routine way to hold back payment for work that is accepted. Automatic interest would reduce dependence on a small supplier having to negotiate for every remedy after the due date. Publishing payment times would make performance more visible to suppliers and help distinguish a stated policy from how a buyer actually pays.

The Council’s aim is not to remove all flexibility from commercial relationships. It is to make the cost of delay visible and to avoid making a small supplier finance a large buyer’s operations without clear agreement. A useful standard must also be practical across borders, legible to owners, and attentive to whether a remedy can be accessed without disproportionate time or cost.

What owners can do now

Before work begins, make the payment terms explicit. Confirm the invoice trigger, due date, payment method, currency and process for raising a genuine dispute. Keep a copy of the agreed terms and any later changes. If the buyer uses a standard contract, read the payment and dispute clauses before committing substantial time or materials.

Invoice promptly and keep a dated record. Retain the contract, purchase order, delivery or acceptance evidence, invoice, reminders and buyer responses together. Record when the invoice was sent and when it was received if that is relevant to the agreed process. A clear timeline helps establish what is owed and can make a later conversation with an adviser, mediator or regulator more efficient.

Separate an invoice query from a payment delay. If a buyer disputes an amount, ask what specific item is disputed and what information would resolve it. Keep the undisputed portion visible in your records, and avoid treating a general delay as a settled dispute. This is a practical record-keeping suggestion, not a statement of what a court or regulator will require in a particular jurisdiction.

Check the applicable local rules. UK owners should track the bill’s progress rather than assume the proposed protections are already in force. Indian micro and small enterprises should check eligibility and the requirements that apply to their written agreement and payment record. EU-based suppliers should not rely on the proposed 30-day cap as though it had been adopted. For other jurisdictions or cross-border contracts, seek current local guidance.

Use collective evidence carefully. Owners who choose to report a pattern can record the dates, amounts, stated terms and outcome without naming their business publicly. A cluster of well-documented experiences can help test whether a practice is frequent and consistent, while protecting members’ anonymity. No single report should be taken as proof about a whole company or an entire market.

Parliamentary attention is meaningful, but the owner’s immediate task remains concrete: know the agreed terms, keep the evidence, identify the rules that actually apply, and seek help before the cost of waiting becomes unmanageable. The Council’s case for shorter payment times rests on a basic principle: small suppliers should not routinely be required to finance the businesses that buy from them.

Notes and sources

1. UK Late Payments Bill overview and government consultation response. The bill’s introduction date and proposed provisions are reported as of 21 May 2026. ↩
2. United Nations, Micro-, Small and Medium-sized Enterprises Day. ↩
3. International Labour Organization, Micro, Small and Medium-sized Enterprises. ↩
4. Legal 500, overview of payment rules for micro and small enterprises in India. ↩
5. European Parliament, Legislative Train, revision of the Late Payment Directive. ↩

Sources

1. UK Small Business Commissioner, Late Payments Bill: what it could mean for your business
2. UK government, Late payment consultation: time to pay up
3. United Nations, Micro-, Small and Medium-sized Enterprises Day
4. International Labour Organization, Micro, Small and Medium-sized Enterprises
5. Legal 500, Payments to micro and small enterprises in India
6. European Parliament, Legislative Train: Late Payments Directive revision