The Real Cost of Late Payments for Small Businesses

Rachel Craft
Oct 6
2 min read

Late payments are more than an inconvenience for small businesses—they’re a real threat to productivity, cashflow and growth. Chasing overdue invoices takes time, ties up resources, and often leaves business owners worrying about how to balance the books.

Recent research paints a worrying picture. A 2025 QuickBooks report shows that 62% of UK small businesses are currently owed money from unpaid invoices, with the average business owed £21,400.

Meanwhile, Sage and CEBR estimate that UK SMEs are owed a staggering £112 billion in late payments, with an average overdue invoice worth £42,000.

These aren’t small figures—they represent substantial sums that can cause sleepless nights for business owners and put serious strain on cashflow.

Why late payments hurt more than just the numbers

Lost time: Around 22% of small businesses spend staff time chasing payments—an average of 86 hours a year (Small Business Commissioner). That’s time that could be spent winning customers, improving operations or growing the business.
Rising problem: GoCardless research shows that 45% of business owners are experiencing more late payments now than a year ago.
Lost potential: The same survey found 61% of SMEs believe late payments are holding their business back from reaching its full potential (Fintech Times).
Economic impact: Collectively, late payments are estimated to cost the UK economy nearly £11 billion every year (Small Business Commissioner).

The year-end crunch

The impact of late payments is felt all year round, but it can be especially damaging towards the end of the year. Many businesses earn a large share of their annual revenue in the final quarter, while also managing seasonal peaks and higher expenses.

Late payments during this period can create a perfect storm: limited cashflow, stretched teams, and missed opportunities to invest in the year ahead.

The hidden costs of late payments

Beyond the financial strain, late payments can cause:

Strained supplier relationships – when you can’t pay bills on time.
Missed opportunities – like bulk discounts or new contracts you can’t commit to.
Low morale – when staff are stuck chasing invoices instead of focusing on growth.
Growth on hold – with investment in staff, equipment or expansion delayed.

The solution: Invoice Finance

One of the most effective ways to ease late payment pressure is through invoice finance. Instead of waiting 30, 60 or even 90 days for a customer to pay, businesses can release up to 85% of an invoice’s value within 24 hours of raising it. The balance follows once the customer pays. This gives businesses the working capital they need to pay suppliers on time, protect staff wages, and seize new opportunities—without taking on extra debt.

👉 At Regency Factors, we’ve been helping businesses keep cashflow moving for more than 30 years. If late payments are slowing you down, get in touch to see how invoice finance could keep your business growing.