New figures show payment delays leave UK SMEs waiting longer for money owed

Cashflow pressures are mounting for Britain’s smaller businesses as a growing proportion of invoices remain unpaid beyond their agreed deadlines, leaving firms waiting longer to access money they are owed.

Figures from Sage’s June 2026 SME Performance Pulse, which draws on anonymised information from almost 150,000 businesses, show that 49% of invoices issued by UK small businesses are overdue. On average, companies are having to wait a further 27 days after their agreed payment terms have expired before receiving payment.

Separate research from FreeAgent found that 49.3% of invoices sent by UK small businesses over a 12-month period were paid late, up from 43% the year before, with East Central London and the Isle of Man the worst-affected areas in Britain and Northern Ireland recording the highest national late-payment rate at 62.4%.

The Office of the Small Business Commissioner introduced the Fair Payment Code in late 2024, replacing the earlier Prompt Payment Code, as a voluntary framework encouraging larger businesses to commit to fairer payment practices. However, research published by Hiscox in February 2026 found that UK SMEs remain collectively owed £70.4bn, suggesting the code has yet to meaningfully shift payment culture across the wider business population.

The Federation of Small Businesses has previously estimated that around 50,000 UK businesses close each year as a direct result of cas flow problems linked to late payment — a figure that industry commentators say underlines how overdue invoices can escalate from a cashflow inconvenience into an existential threat for smaller firms.

Federal Management, a leading Commercial Debt Collection Agency providing services to businesses across the UK, said the reasons invoices go unpaid vary considerably, from genuine financial difficulty on the part of the client to deliberate delay tactics and simple administrative oversight.

“Not every unpaid invoice is a dispute, and not every one is a business trying to avoid payment,” Chris Spencer for Federal Management said. “Sometimes it really is as simple as an invoice landing with the wrong contact and sitting there for weeks. The problem is that businesses often wait too long to escalate, by which point recovering the debt has become far harder than it needed to be.”

Under the Late Payment of Commercial Debts (Interest) Act 1998, UK businesses are entitled to charge statutory interest of 8% above the Bank of England base rate on overdue commercial invoices, along with reasonable recovery costs, provided payment terms were clearly documented from the outset.

Businesses across the UK are advised to strengthen contracts with clear payment terms, run credit checks on new clients, issue proactive reminders ahead of due dates, maintain regular cash flow forecasts, and seek professional recovery support once internal chasing has failed to resolve an outstanding invoice.