Nearly one in three UK small businesses now spends more than six hours a month chasing overdue invoices. That is the best part of a working day, every month, spent asking people for money they already owe you.
There is a fix, it has existed for decades, and hardly anyone uses it.
01What the research found
Howden published the numbers on 14 August:
- 34.5% of SMEs report cash flow problems caused by delayed payments
- Nearly one in three spend more than six hours a month chasing invoices
- Around 30% deal with late payments regularly, and more than half at least occasionally
- Nearly one in five have written unpaid invoices off entirely
- One in ten rely on an overdraft or other credit to bridge the gap
Howden links late payments to over 1,000 business closures every month. Separately, Sage has estimated the cost to the UK economy at around £11bn a year.
02The advice everyone gives is the wrong advice
Chase harder. Firmer terms, better reminders, a proper credit control process. It helps at the margin and it is worth doing.
But it does not touch the actual problem, which is not that your customers are ignoring you. It is that your cash is sitting inside an invoice instead of inside your account, and no amount of chasing changes a 60 day term into cash today. Good credit control might pull a payment forward by a week. That is the ceiling.
Meanwhile it costs you the scarcest thing you have. Six hours a month of an owner's time produces nothing except money you were already owed.
03The bit that complicates the story
Worth saying plainly, because you will not read it in most coverage: late payment is improving.
Government statistics show large businesses paid 15% of invoices late in 2025, down from 16% the year before and 25% in 2018 when reporting began. Average payment time is 32 days, against 35 in 2018.
Both things are true. The rate is falling and the cost is still measured in billions, and if you are on the wrong end of the one invoice in six that still goes late, the trend is no comfort at all.
04What actually moves
Invoice finance works on the timing rather than the diligence. You draw a proportion of the invoice when you raise it, instead of when your customer decides to pay.
And because repayment comes from your customer paying, providers weigh your customer book heavily alongside your own accounts. That is a genuinely different assessment from a term loan, which is why a business that has had a difficult couple of years but sells to solid customers sometimes gets further here than at the bank.
It is not free and it is not right for everyone. The full version covers what it costs, the three confusingly similar products, a worked example on a £50,000 invoice and when an overdraft beats it: how to turn unpaid invoices into working capital.
Unpaid invoices already squeezing the month? Working capital finance can bridge the gap while the payments catch up.
Figures as published by the named sources at the time of writing. Applications are subject to status, affordability and lender criteria.
