A fair deal for small business owners

In order to  try and protect businesses from late payment of their invoices,  The Late Payment of Commercial Debts (Interest) Act 1998 already allows business to charge interest at 8% over the base rate of the Bank of England and fixed compensation on overdue business to business invoices.  

However, this legislation does not offer any protection against big businesses, such as supermarkets,  imposing extended payment terms under which they can make contractually late payments for supplies made, for instance 90 days payment term, rather than the more usual 14 or 30 days.

This all about the change with the introduction of new legislation which will enforce a maximum payment term of 60 days, announced in the King’s Speech and introduced to Parliament on 19 May 2026, following years of hard work by the Federation of Small Businesses.

Whilst the proposed legislation still has to make its way through Parliament, it has been welcomed by small business owners and will hopefully provide them with much needed assistance to ensure the viability of their businesses.

Late payment destroys thousands of viable small firms a year, damages growth, hits confidence, and keeps hardworking business owners up at night wondering how they will cover wages, bills, and tax payments. For too long, large businesses have used small suppliers as a free overdraft.

https://www.credit-connect.co.uk/news/kings-speech-small-businesses-welcome-late-payment-announcement/