Late Payments in the UK

56.4m staff hours per year chasing late payments!

With over 5 million micro and small businesses operating in the UK, accounting for a third of all business turnover, they are crucial to the economy and wider society given they employ over 13 million people.

However these businesses are fighting an uphill battle when it comes to receiving payment at a time when a healthy cash flow is critical to their survival and growth. For a business to conduct its daily activities it needs cash to buy stock and inventory, pay the bills and staff, and invest in research or new technology. 

Late and long payment times disrupt the cash flow cycle and can prevent a business from paying its bills, eventually leading to business failure. 15% of SMEs cited cash flow and late payments as an obstacle to running their businesses in 2023. 

Data shows that in the UK small businesses are owed on average an estimated £22,000 in late payments accounting for around 18% of invoices, and the average time to pay was 32 days in 2023. Research estimates SMEs spend 56.4m staff hours per year chasing late payments at a cost of £6.3bn per year and the cost of additional finance to cover cash flow shortfalls as a result of late payment SMEs is £684m per year.

With no sign of any new legalisation to combat these stats, businesses are turning to funding facilities to bridge the gap and at the same time bolting on credit control services. Invoice Finance proving to be the most popular route for these businesses as this allows them to receive payment immediately and outsource the collections allowing them to focus on their business.