Late payments affect an estimated 28% of UK businesses, or more than 1.5 million businesses each year. Businesses were estimated to be owed £26 billion at any given time, while the central estimate of the total annual economic cost was £10.745 billion. These figures come from different measures and periods, so they should be read as estimates rather than a single count of overdue invoices.
Contents
- How widespread are late payments among UK businesses?
- How late-payment exposure varies by business size
- How much cash is tied up in late payments?
- What actions and direct costs do late payments create?
- How late payments affect finance, investment and survival
- How large businesses pay suppliers late
How widespread are late payments among UK businesses?
The 2024 survey period and the 2025 publication of Late payments research estimated that 28% of UK businesses were affected by late payments each year. The same research estimated that more than 1.5 million businesses were affected. It also estimated £26 billion in late payments owed at any given time.
The estimated cost depends on what is included. The direct annual cost to UK businesses was estimated at about £7 billion in 2024, before wider economy-wide effects. The central economy-wide estimate was £10.745 billion, equivalent to approximately 0.4% of UK GDP. These are modelled estimates for 2024, not an audited total of every overdue invoice. Late payments research.
The Longitudinal Small Business Survey 2024: SME employers provides a narrower view of employers with 1 to 249 employees. In 2024, 47% of SME employers said they gave customers trade credit. Among those businesses, 57% said late payment was a problem. Across all SME employers, 27% identified late payment as a problem, and 26% cited it as a major obstacle to business success. Longitudinal Small Business Survey 2024.
The same survey recorded a possible chain effect: in January 2024, 40% of businesses said customers being paid late was a driver of the late payments they received. This indicates that payment delays can be passed through commercial relationships, although the figure describes respondents’ reported experience rather than a measured causal rate.
How late-payment exposure varies by business size
The impact-study survey conducted in late January to early February 2025 found that reported late-payment issues increased with business size. At least one late-payment issue was reported by 20% of micro businesses, 42% of small businesses, 51% of medium-sized businesses and 67% of large businesses.
The study also measured two specific exposures together: overdue invoices and payment terms longer than 60 days. Both affected 12% of micro businesses, 21% of small businesses, 35% of medium-sized businesses and 59% of large businesses during that survey period.
Among businesses offering trade credit, late outstanding invoices represented the following share of invoice value:
| Business size | Late outstanding invoices as a share of invoice value |
|---|---|
| Micro | 10.9% |
| Small | 12.0% |
| Medium-sized | 16.5% |
The figures are from the late January–early February 2025 survey and apply to businesses offering trade credit. The supplied study figures do not provide a corresponding invoice-value percentage for large businesses in this measure. Late payments research.
These results show why a percentage of affected businesses should not be treated as the same thing as the percentage of invoice value delayed. Incidence was highest among large businesses in the survey, while the highest reported late-invoice share among the listed trade-credit groups was for medium-sized businesses.
How much cash is tied up in late payments?
The 2024 survey-period averages show a large difference between affected businesses and all businesses in each size group. For affected micro businesses, average current late payments were £9,214, compared with £2,480 across all micro businesses. The corresponding figures were £52,081 and £25,855 for small businesses, £193,635 and £106,357 for medium-sized businesses, and £703,479 and £447,987 for large businesses.
Across all businesses, the average current late payment was £4,796. Among businesses affected by late payment, the average was £17,085. These are averages for current late payments during the 2024 survey period; they are not forecasts of future receivables.
For affected businesses, the late-payment balance also represented different proportions of annual turnover:
| Business size | Average late payments as a share of annual turnover |
|---|---|
| Micro | 4.61% |
| Small | 1.47% |
| Medium-sized | 0.79% |
| Large | 0.23% |
The cash amount rises with business size in the reported averages, but the turnover share falls. For a micro business, a smaller absolute balance can therefore represent a larger proportion of the operating base. The study reports these as averages for businesses affected by late payment, so they should not be used to estimate an individual firm’s exposure without additional information. Late payments research.
What actions and direct costs do late payments create?
Late payment created a range of reported responses in 2024. Staff time spent chasing unpaid debtors was the most common listed action, reported by 22% of surveyed businesses. Other responses included injecting personal funds into the business, reported by 14%; raising prices of goods or services, 11%; starting legal proceedings against a customer, 8%; commissioning a debt-collection agency, 7%; using supply-chain finance, invoice factoring, invoice discounting or selling overdue invoices, 7%; taking out debt finance, 6%; reducing headcount, 6%; and raising equity finance, 5%.
These percentages describe businesses reporting each action and are not mutually exclusive. A business could, for example, spend staff time chasing an invoice and also use debt finance. They should not be added together to create a total share of businesses.
At economy level, the central annual opportunity cost of staff time spent chasing unpaid debtors was estimated at £2.259 billion in 2024. The central annual opportunity cost of debt collection was estimated at £1.132 billion. Both figures are estimates from Late payments research, and the opportunity-cost framing means they are not simply cash fees paid to collection agencies.
The range of responses indicates that the cost is not limited to the unpaid invoice itself. Some businesses reported using internal labour, external collection, additional finance, owner capital, price changes or employment reductions. The available figures identify the reported actions and estimated costs; they do not establish that every action was caused solely by late payment.
How late payments affect finance, investment and survival
The time burden varied substantially by size. Affected micro businesses spent an average of 75 staff hours per year chasing unpaid debtors, compared with 20 hours across all micro businesses. Affected small businesses spent 138 hours, compared with 69 hours across all small businesses. The affected-versus-all figures were 324 versus 178 hours for medium-sized businesses and 1,084 versus 690 hours for large businesses.
The same 2024 survey period recorded investment foregone among affected businesses. Micro businesses reported an average of £6,103 in annual investment foregone, equal to 3.06% of annual turnover. Small businesses reported £19,170, or 0.54% of turnover. Medium-sized businesses reported £126,187, or 0.51% of turnover. Large businesses reported £77,015, or 0.03% of turnover.
| Business size | Annual investment foregone | Share of annual turnover |
|---|---|---|
| Micro | £6,103 | 3.06% |
| Small | £19,170 | 0.54% |
| Medium-sized | £126,187 | 0.51% |
| Large | £77,015 | 0.03% |
The investment figures are reported averages, not a forecast of total UK investment lost. They show a lower absolute reported amount for large businesses than for medium-sized businesses in this dataset, alongside the smallest turnover share.
The survival evidence is historical. Among businesses tracked from 2015 to 2019, those with a big late-payment problem had a 20% closure rate by 2019, compared with 7% for similar businesses without that problem. The study estimated the associated difference in closure rates at 14 percentage points by 2019. Its historical model estimated 14,468 additional businesses closed each year because of late payments, with a 90% confidence interval of 1,968 to 26,914. Businesses estimated to close each year because of late payments accounted for approximately 40,000 jobs. These are historical model estimates published in 2025, not a current closure count or a forecast.
How large businesses pay suppliers late
The government’s Large businesses’ payment practices and performance statistics 2025: commentary measured supplier payment performance in 2025. Large UK businesses took a median 32 days to pay suppliers. They paid 15% of invoices late by number and 14% of invoice value late.
The share of invoices paid late by number fell from 25% in 2018 to 15% in 2025. This is a comparison across the reported 2018–2025 period; it does not mean that every sector or individual business followed the same path. Large businesses’ payment practices and performance statistics 2025.
Payment performance differed by sector in 2025. Large businesses in manufacturing took a median 45 days to pay suppliers, compared with 21 days for large businesses in finance and insurance activities. Manufacturing also had the highest late-payment share by invoice number among sectors, at 21%. Accommodation and food service activities had the lowest listed sector share, at 9%.
The 2025 large-business figures complement, but do not replace, the business-impact estimates above. They measure payment timing and late-payment shares for large businesses, while the impact study also examined cash tied up, staff time, investment foregone and historical closure associations across size groups.