Commercial Payments Bill: could faster invoices reduce emergency borrowing?

The Commercial Payments Bill is aimed at persistent late payment and lengthy contractual terms between businesses. Government material describes a maximum payment term of 60 days for many transactions, mandatory statutory interest on late payments and stronger investigation and enforcement powers for the Small Business Commissioner.

Amendments have also raised the possibility of a 45-day limit. Parliamentary debate can change wording, scope, exemptions and timing. A proposal at report stage is not a rule that a finance forecast can safely assume from next month.

A profitable business can run short of cash when staff and suppliers must be paid weeks before customers settle. Long debtor days increase the working capital tied up in sales. Businesses often bridge that gap with overdrafts, revolving credit, invoice finance, cards or owner funds.

Faster payment could reduce the peak facility required and the interest paid. It would not eliminate working-capital needs: growth itself consumes cash, seasonal stock must still be bought and disputed invoices can remain outstanding whatever the standard term says.

Build separate cash-flow scenarios using the customer behaviour the business sees today, a 60-day case and, if useful, a 45-day case. Keep the current-behaviour scenario as the funding base until enacted rules and actual payment data justify a change.

Clean invoice evidence improves both collections and access to finance. Record purchase orders, delivery or acceptance, agreed variations, invoice date, contractual due date, communications and disputes. That file can support credit control, statutory-interest claims and an invoice-finance provider’s eligibility checks.

Invoice finance can turn an eligible B2B receivable into cash before the customer pays. It may suit growing businesses with a strong customer ledger but a long gap between delivery and payment. The facility normally rises and falls with eligible invoices rather than providing a fixed lump sum.

Compare the advance rate, discount charge, service fee, minimum volume, recourse, customer concentration limits, contract term and treatment of disputes. A proposed legal maximum on payment terms does not make a weak or disputed invoice fundable.

The Lords report stage was scheduled for 15 September 2026. After that, watch for further parliamentary stages, final wording, Royal Assent and commencement dates. Businesses should avoid rewriting contracts or forecasts around a headline until the operative provisions are clear.

Existing statutory late-payment rights may already apply in some business-to-business transactions. Whether to charge interest is a commercial and legal decision, particularly where a customer relationship is important. Obtain legal advice where a contract or dispute is material.