The Commercial Payments Bill is the biggest change to UK payment rules since 1998 (GOV.UK). It would cap payment terms at 60 days, make interest on late payment mandatory, and give the Small Business Commissioner the power to fine persistent late payers.
It is still going through Parliament (UK Parliament), with the Commons stages to come, so it is not yet law, and the government has said the main measures will start no earlier than 2027.
Most mid-sized manufacturers sell to companies bigger than themselves and buy from companies smaller. The tier-one customers and national retailers you supply are the large buyers the Bill restricts. The fastener supplier, the coating shop and the sub-contract machinist are the smaller suppliers it protects, and in those relationships you are the buyer. The Bill treats the two positions differently.
This article covers what the Bill would give you on the receivables side and where that help stops. It also covers what it would cost you on the payables side, and the process to put in place before it starts, so you’re collecting interest rather than paying it.
What the Bill does
While the details may still move in the House of Commons, the shape of the Bill is settled (Department for Business and Trade):
- A 60-day cap on payment terms where a larger business buys from a smaller supplier. The definition of "large" is left to regulations.
- Statutory interest at 8% above the Bank of England base rate on late payments, which contracts could no longer reduce or exclude. This applies to every commercial contract, whatever the size of the buyer.
- A penalty for disputing an invoice less than eight days before it is due, set at 1% of the disputed amount or £40, whichever is higher.
- Powers for the Small Business Commissioner to investigate persistent late payers, fine them up to 1% of turnover, and adjudicate disputes for suppliers with fewer than 50 employees.
You may previously have seen reports of a 45-day cap floating around, but that has now been dropped. What remains is a power for the government to lower the cap by regulation, with a duty to consult on whether to use it within five years of the cap taking effect.
On the incoming side
The Bill helps here, but only up to a point.
Where your customer counts as large, 90-day terms would come down to 60, and the 8% interest would be yours to claim whatever the contract says.
The cap does nothing if your big customers already pay at 60, or if they are mid-sized themselves. Sixty days against 30-day supplier terms still leaves a month of gap on every order, and a cap on terms does not make anyone pay on the due date.
Three things are worth doing before commencement:
- Read your customers' terms for interest clauses that name a lower rate. Those would become void, and you can push back on them now.
- List which customers are on terms beyond 60 days and which of them would count as large.
- Invoice on delivery rather than at month end, so the clock starts sooner.
If the gap is still too wide after that, talk to your bank or an invoice finance provider about discounting. It has a cost, so treat it as a financing decision rather than a default.
The outgoing side: the half you run
The Bill changes the cost of being late to your own suppliers, even if your terms never touch the 60-day cap. Mandatory interest and the dispute penalty apply to every buyer, and a pattern of late payment can reach the Commissioner.
Most manufacturers are late with suppliers for process reasons rather than cash reasons. Invoices arrive by email, approvals sit with a works manager on the shop floor, a query about a delivery quantity gets raised the day before payment is due, and the payment run is a manual batch whose timing depends on who is free on Friday. Today a missed due date is a conversation: the supplier chases, someone finds the invoice, and interest is rarely claimed.
Under the Bill the interest is owed automatically, and a query raised in the last week costs 1% of the invoice on top. Nothing in the Bill fixes the process that causes the lateness, so that part is on you.
Paying on time by default means three things:
- Every supplier invoice gets a due date captured the moment it arrives, so a dispute can be raised early rather than at the last minute.
- Approvals route to the right person with reminders, so a sign-off cannot sit in a tray for two weeks.
- Payments are scheduled against those due dates, so paying on time does not depend on a good week.
Key takeaways:
- On the receivables side the Bill helps only where your customer is large, and it caps terms rather than enforcing payment on the day.
- On the payables side the interest and dispute penalty apply to you regardless of size.
- Most late supplier payments are process failures, and the Bill prices them.
- The fix is to capture, approve and schedule invoices against due dates before the rules start.
Where Moss fits
Moss runs the payables half. Supplier invoices land in Moss with the due date captured, approvals route to the works manager or buyer with automated reminders, and payments can be scheduled individually or in bulk to arrive by the due date, with execution dates assigned automatically once an invoice is approved. The credit wallet adds a short line settled in full at the end of each billing cycle, which smooths the timing of outflows rather than financing the gap.
Moss doesn't touch the receivables side. It won't finance or discount your invoices and it can't make a large customer pay sooner. That comes down to the Bill, your terms and, if you need it, a finance partner.
On commencement day
The incoming side will need a check of which large customers now fall inside the cap and which contracts carry interest clauses that no longer hold. The outgoing side should need nothing, because the payment runs have been scheduled against due dates for months and nothing is late.
You can find out more about how Moss schedules payment runs here.
