Small firms are owed £12,000 a year in late payments as arrears reach £70bn, report finds

Small businesses in the UK are owed an average of more than £12,000 annually in late payments, with outstanding invoices potentially totalling £70.4bn nationwide, according to research by Hiscox.

The findings, based on a survey of 1,000 small business owners and sole traders conducted by Censuswide, form part of the company’s inaugural Late Payments Report examining the scale and impact of delayed payments.

Hiscox estimated that with 5.7 million small businesses operating in the UK, late payments represent a significant cash flow challenge across the sector.

Almost a quarter (23%) of payments to small firms arrive late, with delays increasing alongside business size – from 19% of payments to sole traders to 25% for firms employing 10 to 49 staff.

On average, businesses wait around three weeks beyond the due date to receive overdue payments and pursue approximately 14 late invoices each year.

This equates to a cumulative 331 days spent waiting for payment across all outstanding invoices annually.

For 17% of businesses, payment can take more than a month after the due date, and in some cases invoices remain unpaid.

An anonymous business owner told researchers: “There’s always the fear that someone won’t pay up. I’ve had it only twice in nine years where an invoice hasn’t been paid at all.