If a customer’s overdue invoice is squeezing your cash, you’re not alone. Late payments small business owners face can delay supplier and staff pay and force short-term borrowing. Survey data shows how widespread this is, and what owners do about it.
This explainer is part of the wider topic of business cash flow.
| Item | Value |
|---|---|
| UK small businesses reporting more late payments than 12 months earlier (survey run October to December 2024) | 45% of respondents |
| Small businesses receiving payments up to 60 days late | 24% of respondents |
| Small businesses that used short-term financing because of late payments | 28% of respondents |
| Small businesses saying late payments affect paying their own suppliers on time | 36% of respondents |
| US invoice payments paid late (Sage study, reported December 22, 2017) | 13% of invoice payments |
| US invoices written off as bad debt (same study) | 10% of invoices |
The UK figures come from the GoCardless and Federation of Small Businesses release of 6 March 2025, and the US figures from a Sage study reported by CPA Practice Advisor in 2017. Figures can change, so check the source before you rely on them.
How common are late payments for small businesses?
A GoCardless survey of over 2,000 small business respondents, commissioned through the Federation of Small Businesses (FSB), found that 45% were experiencing more late payments than 12 months earlier. Another 50% were concerned the number would rise over the next 12 months. The survey ran from October to December 2024 and drew 2,298 responders, according to the GoCardless release.
The delays can be long. Nearly a quarter (24%) of respondents said they receive payments that are up to 60 days late. These are UK survey answers, so experiences in other countries may differ.
Small businesses accounted for 60% of UK employment and 48% of business turnover in 2024, according to the same GoCardless release. That share is why a slow-paying customer can matter well beyond one small business.
In September 2024, the UK government pledged to crack down on late payments, as The Fintech Times reported in March 2025. The same report cites FSB research putting the cost to SMEs at around £22,000 a year on average and the number of business closures linked to the issue at 50,000 a year.
The domino effect on suppliers, staff and growth
Late money rarely stays one business’s problem. In the GoCardless and FSB survey, respondents described a domino effect in these terms:
- 36% said late incoming payments affect their ability to pay their own suppliers on time.
- 18% said late payments have affected their ability to pay employees.
- 61% said late payments are holding their business back from its full potential.
The last figure rose to 67% in food and beverage and 64% in manufacturing, according to the same survey. Separately, 28% had used short-term financing, such as loans and credit lines, to manage cash flow because of late payments, rising to 40% in food and beverage and 32% in retail. The cost of any such borrowing depends on the provider and the country.
A look at what is working capital explains why this happens: working capital is the money a business has available to cover day-to-day costs while it waits for invoices to be paid.
Older US research points the same way. Sage’s study, undertaken by Plum Consulting and analyzing responses from over 3,000 business builders, was reported by CPA Practice Advisor. It found that nearly 25% of US respondents expected an impact on staff pay, nearly 25% were delaying investment into the company, and over 18% said late payments impede their ability to pay their own suppliers.
Why many owners hesitate to chase overdue invoices
Chasing costs time and money. In the GoCardless and FSB survey, 52% of respondents said they forfeit late payments up to 10 times a year to avoid the time and cost involved in chasing them.
The Sage findings point to another reason. Over 30% said they were not chasing because it would negatively impact client relationships, and over 40% said they had no real reason for not chasing, as CPA Practice Advisor reported.
Many owners also feel they lack control. Half (50%) of respondents agreed that late payments are an “inevitable cost of doing business”, and 32% felt they have little to no control over how to manage them, according to the GoCardless release. That sense of control varied by who owed the money:
- 50% reported little or no control over late payments from big business customers.
- 30% reported little or no control over late payments from small business customers.
- 26% reported little or no control over late payments from consumer payers.
How late payments compare across countries
The Sage research covered 11 countries and found that small and medium businesses account for at least 96% of total enterprise in them. Sage’s headline claim, as CPA Practice Advisor reported on December 22, 2017, was that late payments cost small and mid-sized businesses as much as $3 trillion globally. That is a 2017 estimate from one company, so it shows rough scale rather than a current total.
| Country | Invoices paid late | Average days a year spent chasing late payments | Invoices that become bad debt |
|---|---|---|---|
| UK | 18% | 15 days | 9% |
| United States | 13% | 15 days | 10% |
| Germany | 9% | 5 days | 8% |
| Brazil | 7% | 14 days | 7% |
The country figures above come from the Sage study as reported by CPA Practice Advisor on December 22, 2017, and survey methods and definitions may differ from newer surveys.
In every country in the Sage table, protecting the client relationship was the most cited reason for not chasing late payments.
What owners say they would do about late payments
The GoCardless and FSB survey also asked about steps owners could take themselves. Respondents said:
- 53% would charge late fees in the future.
- 33% would consider changing payment methods.
- 27% would automate payment processes.
GoCardless, a bank payment company, said customers tell it that automating collections with pull-based methods such as Direct Debit could get them paid up to 47% faster. That is the company’s own claim rather than independent evidence, and results depend on the customer, payment method and country.
A cash flow forecast is one way to see where a slow-paying customer could open a gap between money coming in and money going out. Terms and costs of any short-term finance used to bridge such a gap vary by provider and country.
Frequently asked questions
How many small businesses are paid late?
Show answer
It depends on the survey. In the UK survey run from October to December 2024, 45% of respondents said they were seeing more late payments than 12 months earlier, while the Sage study reported in 2017 found 13% of invoice payments to US small and medium businesses were paid late.
Why do some small businesses not chase late invoices?
Show answer
The Sage study found that over 30% did not chase because they felt it would negatively impact client relationships. The GoCardless and FSB survey found that 52% forfeit late payments up to 10 times a year to avoid the time and cost involved.
Do late invoices turn into bad debt?
Show answer
Sometimes. The Sage study reported that up to 10% of payments are either never paid or paid so late that businesses write them off as bad debt, and that 10% of US invoices were written off as bad debt.
Are these figures the same in every country and year?
Show answer
No. The UK survey dates from 2024 and the Sage study from 2017, and the country table shows clear differences between places. Check the original source for each figure before you rely on it.
This page is for general information and education only and is not financial, investment, tax or legal advice.
