New data reveals the UK’s worst-paying business sectors
As the UK marks Micro-, Small and Medium-sized Enterprises Day on 27 June, Novuna Business Cash Flow – a leader in SME and corporate cash flow finance – is spotlighting one of the biggest threats to SME survival: late payments.
With the average small business losing £22,000 a year to overdue invoices – and 50,000 SMEs shutting down annually – the scale of the issue is growing. Recent data reveals that:
40% of B2B invoices in the UK are overdue
7% of sales are written off as bad debt
64% of businesses expect a heightened risk of insolvency this year
Even though UK law sets a 30-day payment term (unless otherwise agreed), actual payment times are extending well beyond that, with Days Sales Outstanding (DSO) in Western Europe now averaging 52 days, up from 41 in 2023.
Novuna Business Cash Flow has drawn on its own data and wider market findings to identify which sectors are most likely to delay payment – and how SMEs can protect themselves in today’s increasingly volatile cash flow landscape.
The UK’s slowest paying industries
Industry payment data has been sourced from a combination of official and industry-specific UK bodies, including government payment reporting data, the Small Business Commissioner, Build UK, and others. By comparing these benchmarks with its own SME client data, Novuna Business Cash Flow has produced the late payment league table above – highlighting clear trends in sector-level payment behaviour.
Across both datasets, manufacturing consistently emerges as the slowest-paying sector, with others such as transport, administrative services, and wholesale also showing long delays. At the other end, education stands out for consistently prompt payment performance – averaging 30 days or less.
“One of the key advantages of supporting such a broad base of SMEs is that we get a clear view of where late payment issues are concentrated,” said John Atkinson, head of commercial and strategy, Novuna Business Cash Flow.
“By sharing these insights, our aim is to help small businesses navigate risk more effectively, set realistic expectations with customers, and strengthen their cash flow strategies”
This table serves as a practical tool for SMEs – offering a snapshot of payment behaviour by industry and supporting more informed decisions around payment terms and client management.
Top causes of non-payment
Late payments aren’t always due to financial difficulty – additional analysis by Novuna Business Cash Flow shows they often stem from preventable issues:
“No response” – 20% of overdue invoices are met with silence, despite follow-up attempts. This is not only frustrating but may signal a deliberate stalling tactic.
“Still in customer approval process” – 15% of delays occur because the invoice hasn’t been signed off internally. This could reflect inefficiency or a reluctance to pay quickly.
“Copy requested” – 12% of cases involve customers requesting the invoice again, often well after the original was sent. This may indicate disorganisation or be used to reset the clock on payment terms.
“Slow payer” – 7% of customers are repeat offenders who routinely exceed agreed payment windows.
These four reasons alone account for more than half of all late payments reported – and many of them are predictable, preventable, or signs of poor payment culture.
What you can do: Practical steps to improve payment outcomes
While some late payments are unavoidable, many delays stem from preventable process breakdowns. Novuna Business Cash Flow’s data shows that small oversights – like missing PO numbers or delayed invoicing – can push back payments by weeks.
Here are five ways SMEs can reduce the risk:
Confirm PO requirements upfront – One of the most common reasons for delays. Always check if a PO is needed and document it clearly.
Log hours and pricing as you go – Real-time tracking prevents disputes and ensures accurate billing.
Send invoices promptly – Even a short delay can stall your payment cycle. Don’t wait.
Follow up professionally and consistently – Reminders, statements, and polite persistence keep invoices visible.
Know when to escalate – If chasing payments becomes a burden, external credit control support can help.
John Atkinson added: “Cashflow issues can often begin with late payments – but they’re frequently rooted in breakdowns we can prevent. By tightening processes, SMEs can close the gap between doing the work and being paid.”
Adopting these simple habits can help businesses get paid faster – and manage their cash flow with more structure and confidence.
When credit control becomes a burden
For some SMEs, credit control is a time-consuming or uncomfortable task – especially when following up with valued clients or managing frequent delays.
In these cases, outsourcing to a credit control service can help. It provides access to:
A dedicated team to handle credit control on your behalf
Professional, relationship-sensitive communication with customers
Improved cash flow visibility and forecasting
Reduced internal strain from chasing late invoices
John Atkinson concluded: “It’s one thing to talk about the cost of unpaid invoices – but what’s often overlooked is the time and headspace they drain from SME owners. Our league table exposes the sectors where late payment is systemic. With our credit control support, we’re helping SMEs take back control.”
Why this matters on MSME day
MSME Day is about celebrating small business contributions – but also addressing what holds them back. Late payments remain one of the biggest barriers to sustainable growth. With smarter processes and the right support, SMEs can strengthen their financial resilience and thrive.