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Thirty-eight UK businesses close every day because of one thing: late payments. This isn't just frustrating; it's a silent killer of livelihoods, jobs, and communities.

A new report I read recently confirmed what many of us have felt, this problem is far more widespread and damaging than we realise.

📌 TL;DR:

• Late payments are costing the UK economy nearly £11 billion a year.

• Over 1.5 million businesses are affected, with £26 billion owed at any time.

• 14,000 businesses close each year directly due to late payments.

• The average affected business is owed £17,000.

• Micro businesses are hit hardest.

Even a 10% reduction in late payments could unlock £1 billion in economic benefits.

💡 Why It Matters

You know how we’re always hearing about the need to support small businesses, boost innovation, and grow the economy?

Well, here's the thing, none of that works if businesses aren’t getting paid on time. Late payments are quietly undermining everything we say we care about.

And this isn’t just a cash flow inconvenience. It’s a real threat to people’s livelihoods.

📈 How Big Is the Problem?

According to the report, around 1.54 million businesses deal with late payment issues each year.

That’s a huge number. And when you zoom in, the numbers get even more worrying:

• A massive £26 billion is tied up in late invoices

• The average business affected is owed £17,085

• And collectively, 133 million hours are spent each year chasing money that should already be in the bank

All of that adds up to £11 billion a year drained from our economy.

🧨 Who Gets Hit the Hardest?

It’s the micro businesses, the solo founders, freelancers, tiny teams. They’re the ones losing the biggest chunk of their revenue (about 4.6%) just waiting to get paid.

They don’t have big finance teams or buffers. Many aren’t using invoicing software. They're just trying to stay afloat.

Meanwhile, larger companies might be owed more in absolute terms, but they can usually weather the delay. Small businesses can’t.

🚫 This Isn’t Just Frustrating. It’s Fatal.

This stat really got me: 14,000 businesses a year shut down because of late payments.

That’s 38 closures a day.

That means jobs lost. Families affected. Ideas shelved. All because someone didn’t pay their invoice on time.

🔧 How Are Businesses Coping?

Honestly? They’re scraping by.

• Nearly a quarter are using precious staff time just to chase invoices

• Some inject their own personal savings

• Others go legal, cut staff, or raise their prices

A lot are walking away from repeat offenders entirely, 15% said they’ve turned down work from clients with bad payment habits.

🤝 What Could Change If We Fixed It?

Here’s the hopeful bit: even just a 10% improvement in how we pay each other could unlock £1 billion a year for the UK economy.

That’s not small change.

The government has rolled out the Fair Payment Code to encourage better practices, but honestly, this will take more than policy.

It’s about changing the culture.

🪸 What Can You Do?

If you're a business owner:

• Set clear payment terms upfront

• Use invoicing tools that send automatic reminders

• And if you can, walk away from those late payers who just don’t respect your time

If you're a buyer:

• Pay on time. Every time.

• Offer fair terms and build trust with your suppliers

If you work in procurement or policy:

• Bake prompt payment into your contracts

• Celebrate the organisations who do it right

🏛️ Final Thought

It’s easy to overlook this stuff.

Late payments might not seem like a big deal if you're not on the receiving end. But they add up. And they hurt.

We can’t say we support small businesses if we’re fine with a system that routinely starves them of cash.

This is fixable. And it starts with each of us deciding to be better payers.

📨 Until Next Time,

Thanks for reading.

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