The 2026 King's Speech, delivered on Wednesday 13 May, confirmed that the government will introduce a Small Business Protections (Late Payments) Bill in the current parliamentary session. For UK SMEs — and the ecommerce, services and trades businesses we work with at Monek — the headline numbers matter: maximum B2B payment terms of 60 days, mandatory interest on overdue invoices at 8% above the Bank of England base rate, and real enforcement powers for the Small Business Commissioner. Late-paying customers have just been put on notice.

What's in the Bill

The figures land squarely on the side of suppliers. According to the briefing notes published by Number 10, the government estimates late payment costs the UK economy £11 billion a year and is responsible for the closure of 38 small businesses every single day. The Bill is structured to attack that problem at multiple points:

  • 60-day maximum payment terms — the default ceiling for any B2B contract. Longer terms will only be enforceable in limited, specified circumstances.
  • Statutory interest at base rate plus 8% — payable automatically on any invoice paid beyond the contractual term, without the supplier having to invoke the late payment provisions in a separate notice.
  • Time limit on invoice disputes — buyers can no longer wait until day 89 of a 90-day cycle to raise a query they should have flagged on receipt.
  • Board-level reporting — large companies with a record of persistent late payment must report at audit-committee level on their payment performance and remediation plans.
  • Real enforcement — the Small Business Commissioner gets formal investigation powers and the ability to fine persistent late payers, not just name and shame them.
  • Construction retentions — the practice of withholding retention payments under construction contracts is banned outright.

What it means for UK merchants this week

The Bill is not yet law. It will go through First and Second Reading, committee and report stages, and the equivalent process in the Lords before Royal Assent — realistically a 12 to 18 month timeline. But the direction of travel is unambiguous, and there is no plausible version of the Bill that comes out of Parliament weaker than it went in. For finance directors, founders and credit controllers the right response is not to wait, but to update the way money flows into the business so that when the new regime arrives, your cash conversion already looks healthy on day one.

That means revisiting two practical levers most SMEs underuse:

  • Move B2B payments off invoices and onto cards where you can — for orders under a few thousand pounds, a Pay by Link request can be sent in under 30 seconds and settled into your bank account next working day, instead of generating a 30 to 60 day receivable.
  • Standardise terms across customers — the new statutory ceiling makes "we always pay on 90" an indefensible position for a buyer, but it is much easier to defend a 30-day standard term in your contract today than to renegotiate one customer at a time once the Bill passes.

Cash flow, not just credit control

The hidden cost of long payment terms is not the headline interest you don't get paid — it is the impact on the rest of the business. A merchant operating on a 90-day receivable cycle is, in effect, financing the working capital of every customer who pays slowly, and is paying for that working capital out of their own card processing margin, supplier credit and overdraft. Mandatory base-rate-plus-8 interest changes the maths, but it only changes it for the supplier who actually invoices the interest — and many SMEs still won't, for fear of damaging the relationship.

The more durable fix is to reduce the proportion of revenue that ever sits on a receivable in the first place. UK businesses that take a high share of revenue by card — through a terminal, a hosted checkout, a Virtual Terminal call, or a Pay by Link — settle next working day on Monek's standard tariff, with the processing fee transparently itemised under IC++ pricing. That cash arrives on day one rather than day 60, and the cost of getting it there is fixed and predictable. For most growing SMEs, shifting even 20% of B2B invoicing onto card or instant-payment rails has a bigger effect on cash flow than chasing statutory interest ever will.

How Monek can help

Monek is directly FCA-authorised (FRN 920628) and built around UK SMEs. Pay by Link and the Virtual Terminal are included as standard on every merchant account, so accounts teams can capture card payments by email or telephone without developer involvement and without changing accounting software. The native Xero integration writes each payment into your ledger in real time, with gross, fee, VAT and net split correctly, so your aged debtor report reflects what is actually outstanding rather than what hasn't yet been reconciled.

If you would like a fast read on which slow-paying invoices you could reasonably move onto card terms — and what that would do to your cost of processing under IC++ rather than blended pricing — our team will review a recent bank statement and a couple of customer ledgers at no cost and tell you exactly where the wins are.