The 60-day clock is coming. Is your finance function ready for it?

Every working day, 38 UK businesses close their doors because someone didn't pay them on time. That's not a rounding error or a worst-case projection. It's the government's own figure, and it sits behind the biggest shake-up of late payment law this country has seen in over 25 years.

For years, paying a small supplier late carried roughly the same consequence as a parking ticket you knew would never arrive. The rules existed. The teeth didn't. That is about to change.

So what's actually coming, and what should a finance team be doing about it now rather than in a panic later?

In short: the UK's Small Business Protections Bill introduces a hard 60-day cap on payment terms for large firms paying smaller suppliers, automatic statutory interest at 8% above the Bank of England base rate on late payments, and a statutory deadline for disputing invoices. Late payment costs the UK economy an estimated £11 billion a year. The most effective preparation is auditing supplier terms, mapping where invoices stall in approval, and building an auditable trail from invoice receipt to payment.

What the new rules say

The Small Business Protections Bill (you may also see it called the Commercial Payments Bill) entered Parliament in May 2026. It isn't law yet, and it still has to clear the usual stages before it takes effect, with most observers expecting that somewhere around late 2026 or early 2027. But the direction is settled, and the headline measures are worth knowing now:

• A hard 60-day cap on payment terms. Large firms paying smaller suppliers will be held to a maximum of 60 days, with only narrow exemptions. Any contract term that stretches beyond that becomes unenforceable. The days of imposing 90 or 120-day terms on a supplier with no leverage are numbered.
• Mandatory interest on late payments. Statutory interest at 8% above the Bank of England base rate, applied automatically. This right has technically existed since 1998, but in practice most small suppliers never dared charge it for fear of losing the client. Making it automatic removes that awkward conversation.
• A statutory deadline for disputing invoices. Sit on an invoice without raising a genuine dispute, and you may owe your supplier compensation for the delay. “We're still reviewing it” stops being a free stalling tactic.
• Real enforcement. The Small Business Commissioner gains powers to investigate, settle disputes outside court, and fine persistent offenders. We're talking penalties in the tens of millions for the worst large-company cases, plus a requirement for those companies' boards to publicly explain poor payment performance.

Why this matters even if you pay on time

It's tempting to read all this and think: we pay our suppliers promptly, so none of it applies to us.

That misses the point in two ways.

First, the cap and the interest rules cut both ways. If you're a smaller supplier being paid late by a larger customer, you'll have a genuine route to interest and recourse for the first time. That's money and leverage you didn't effectively have before. With late payment costing the UK economy an estimated £11 billion a year, that recourse is far from trivial.

Second, and more importantly for most finance teams, the era of “broadly fine” payment behaviour is ending. When late payment carries automatic interest and public scrutiny, the cost of a sloppy approval process stops being invisible. An invoice that sits unapproved in someone's inbox for three weeks isn't just an admin annoyance anymore. It's a clock ticking towards a statutory deadline, and potentially a bill.

The teams that will sail through this aren't the ones with the best intentions. They're the ones who can actually see where every invoice is, who's sitting on it, and how close it is to being late.

What to do before the rules bite

The reassuring part is that none of the sensible preparation is wasted effort, even if your timeline slips. Strong payment hygiene is good practice regardless of what Parliament does.

A few practical steps:

• Audit your payment terms. Find any supplier contract that runs beyond 60 days and start the conversation about bringing it into line. Better to do it calmly now than under a compliance deadline.
• Look hard at where invoices get stuck. Most late payments aren't deliberate. They're the result of an approval that never happened because the right person was on leave, or the invoice landed in a personal inbox, or nobody was quite sure who should sign it off. Map those bottlenecks honestly.
• Tighten your dispute process. If you're going to query an invoice, you'll soon need to do it within a set window. Make sure raising a dispute is a defined, logged step rather than a vague intention.
• Build visibility into the whole chain. From the moment an invoice arrives to the moment it's paid, you want a clear, auditable trail of who approved what and when. That's the difference between confidently demonstrating good practice and hoping nobody asks.

The quiet advantage

Here's the thing most coverage of this legislation misses. The businesses that get ahead of it won't just avoid fines. They'll build something their slower competitors won't have: a finance function where money moving out of the door is controlled, visible, and on time by design rather than by luck.

That's exactly the kind of control ApprovalMax was built to give finance teams. Approvals that route to the right person automatically, a clear record of every decision, and no more invoices quietly ageing in someone's inbox while a statutory clock runs down.

The 60-day cap isn't here yet. But the smart time to fix your approval process was always going to be before you were forced to. This is simply a very good reason to stop putting it off.

Want to see where invoices get stuck in your own process? Book a demo and we'll walk you through it.