The 60-Day Countdown: Inside the Room on the UK’s New Commercial Payments Bill

I recently had the privilege of sitting down with the Small Business Commissioner and other leaders in the British business community for a highly engaging session. The sole item on our agenda? The UK Commercial Payments Bill.

The Commissioner’s office is actively engaging with technology providers whose platforms and data intersect with payment terms, dispute handling, and reporting, all areas the Bill regulates directly. Because SAP Taulia sits squarely in the working capital and invoice/payment space the Bill targets, we have a chance to help shape how these regulations are practically implemented and monitored.

Introduced to the House of Lords in May 2026 and slated to come into force by late 2027 or early 2028, the Government is already calling this the most significant reform to payment legislation in over 25 years. The scale of the problem is clear. Late payments currently drain £11 billion a year from the UK economy, with a staggering 44% of SME invoices paid late.

This Bill is stepping in to stop the bleeding. But for larger buyers, it represents a massive compliance milestone that requires immediate, proactive attention.

Here are my key takeaways from the session, and what businesses need to know to prepare.

1. The 60-Day hard stop (and the 8-day dispute rule)

The biggest headline of the Bill is the statutory cap on payment terms. For domestic, UK-to-UK B2B transactions, terms will be strictly capped at 60 days. For public authorities, it’s an even tighter 30 days. Large business-to-large business transactions will not be part of the Commercial Payments Bill scope.

If your standard contracts stretch to 90 or 120 days without a specific, valid exemption, those terms will soon be legally void and automatically replaced by a 30-day statutory implied term. And no, you cannot just ignore this during contract auto-renewals. Failing to update terms upon renewal will be viewed as deliberate circumvention.

Equally disruptive is the new rule on invoice disputes. Purchasers must now raise disputes in writing at least 8 days before payment is due and provide sufficient detail. Ad-hoc, informal, or slow dispute handling will trigger automatic financial penalties (the higher of £40 or 1% of the contract price).

2. The small business commissioner gets real teeth

Historically, the Small Business Commissioner (SBC) has relied mostly on naming and shaming. Under the new Bill, poor payers will face much tougher punishments.

If a large business has a persistent poor payment record (typically flagged when 25%+ of invoices are late), the Commissioner can now launch investigations, issue enforcement directions, and impose substantial fines of up to 1% of a business’s annual UK turnover.

The SBC will also run a statutory adjudication scheme to resolve disputes outside the courts. Furthermore, large businesses will have to publicly report their statutory interest owed versus actually paid, accompanied by board- or audit-committee-level commentary explaining poor performance.

Oh, and about that interest? It’s mandated at 8% above the Bank of England base rate, and loopholes allowing for lower contractual rates have been firmly closed.

3. A shockwave for the construction sector

One of the most animated discussions at the session revolved around the construction industry. The Bill explicitly bans retention clauses in construction contracts following a two-year transition period.

This means construction companies must urgently transition to alternative cash-flow and security mechanisms. It is a massive shift, and I strongly advise businesses in that sector to look toward early payment solutions to replace traditional retention-based security without trapping vital capital in the supply chain.

4. Supply Chain Finance: from “manufactured problem” to true solution

Historically, there has been criticism of buyers who artificially lengthen payment terms (say, to 120 days) and then offer SCF or Dynamic Discounting as the “fix,” forcing suppliers to pay a fee just to get back to a normal payment timeline.

During the session, I explained how the Bill actually transforms this dynamic. Because 60 days is now a statutory ceiling, buyers can no longer stretch terms indefinitely to monetise the gap.

This shifts SCF back to what it was always meant to be: an optional tool. The 60-day cap is a ceiling, not a floor. Voluntary early payment remains 100% compliant. If a supplier wants cash on day 10 instead of day 60, platforms providing SCF or Dynamic Discounting allow them to access that working capital at a rate often much cheaper than their own overdraft or factoring alternatives. It’s opt-in, invoice-by-invoice, and for large buyers, offering a well-structured early payment program is actually a recognised mitigating action against SBC scrutiny.

What you need to do now

The legislation isn’t retrospective, but the transition period will fly by. You cannot manage these new requirements on legacy systems or spreadsheets.

To stay compliant without the headache, businesses need robust digital infrastructure. From my perspective, this is exactly where a platform like SAP Taulia becomes non-negotiable. Here is what you should be doing today and how the right tech handles it:

Audit Contracts & Automate Terms: Review your standard terms against the 60-day cap. Platforms like SAP Taulia automatically enforce strict term compliance across your payment schedules.
Overhaul Dispute Management: You need a system that captures and tracks invoice disputes early to enforce the new 8-day statutory deadline, protecting you from automatic penalties.
Manage International Complexity: Remember, the Bill strictly covers UK-to-UK transactions. You need a system that can seamlessly enforce 60-day compliance domestically while managing diverse global payment terms across your international supply chains.
Prepare for Statutory Interest & Reporting: Ensure your financial systems can calculate the mandatory 8% + BoE base rate interest and generate the exact data you will need for your government transparency reports.

The Commercial Payments Bill is going to fundamentally rewire UK B2B commerce. For suppliers, it’s a lifeline. For buyers, it’s a mandate to modernise. It’s time to get your house and your payment systems in order. Let’s navigate this together.