Late payments to UK small businesses highest since 2020

In September, late payments to small businesses increased again, according to research. On top of this, UK businesses are already facing challenges such as rising costs and households spending less due to the cost of living crisis.

On average, payments made to small businesses came 8.2 days late in September, which is the highest late payment term since August 2020, according to Xero. The UK's late payment problem is greater than that in Australia (6.5 days) and New Zealand (6.2 days).

To resolve this issue, there are calls for tougher penalties for big businesses that breach agreed payment terms, and new policies which require greater transparency in regulation and reporting on late payments. This is to ensure small businesses are paid on time so they can manage their cashflow and rising costs.

However, the effectiveness of new legislation is questioned by Liz Barclay, Small Business Commissioner as creating new laws is a lengthily procedure, and there aren't enough resources to enforce it. She suggests better relationship management between businesses and suppliers instead.

What can I do whilst I wait for payments?

Whilst your business is facing late payment issues, invoice finance can be a useful facility when waiting for your due invoices to be paid. Invoice finance is fast, does not risk your business assets and means you don't have to wait for your customers to pay you.

Invoice finance allows you to unlock the cash already in your business. Find out more about how invoice finance can help your business.

Article by ICAEW