UK Late Payment Statistics 2026
Late payment remains one of the most damaging pressures on UK SMEs. The average small business is owed around £22,000 in overdue invoices at any one time. UK companies collectively wait beyond agreed terms on invoices worth tens of billions of pounds each year, contributing directly to insolvency, stalled growth and rising demand for invoice finance.
Key statistics
Average value of overdue invoices owed to a UK small business at any one time. Source: FSB (Federation of Small Businesses)
Estimated annual cost of late payment to UK small businesses in time spent chasing debt. Source: FSB (Federation of Small Businesses)
Estimated number of UK small business closures per year attributed to late payment. Source: FSB (Federation of Small Businesses)
Standard statutory payment term for UK business-to-business transactions under the Late Payment of Commercial Debts (Interest) Act 1998. Source: UK Government / Legislation.gov.uk
Average number of days UK invoices are paid beyond agreed terms (Days Beyond Terms). Source: Creditsafe UK
Proportion of UK SME invoices paid late in 2024. Source: Xero Small Business Insights
Total value of late payments outstanding to UK SMEs at end of 2024. Source: Xero Small Business Insights
Statutory late payment interest rate (BoE base rate 4.50% plus 8 percentage points) applicable to B2B debts. Source: UK Government / Pay on Time
Fixed debt recovery cost a creditor can claim on a late B2B invoice under the 1998 Act, depending on invoice value. Source: UK Government
Share of UK construction sector invoices paid late, the highest rate of any major sector. Source: Creditsafe UK
Average actual payment time for invoices in the UK construction sector. Source: Build UK / Constructionline
UK companies required to report payment practices under the Payment Practices Reporting (PPR) regime as at 2025. Source: UK Government – Payment Practices Portal
Proportion of large UK companies that paid more than half their invoices outside agreed terms in their most recent PPR filing. Source: Small Business Commissioner
Number of formal complaints upheld by the Small Business Commissioner against large businesses for late payment since the office launched. Source: Small Business Commissioner Annual Report
Total value of assets funded through UK invoice finance and asset-based lending in 2024. Source: UK Finance
Number of UK businesses using invoice finance or asset-based lending facilities in 2024. Source: UK Finance
Year-on-year increase in new invoice finance clients in the UK in 2024, reflecting rising late payment pressure. Source: UK Finance
Proportion of UK SME insolvencies in 2024 where cash flow problems linked to late payment were cited as a primary cause. Source: Insolvency Service
Number of County Court Judgments (CCJs) registered against UK businesses for unpaid debts in Q4 2024. Source: Registry Trust
What the numbers mean
Late payment is a structural problem in the UK economy, not a cyclical one. Even during periods of relatively low interest rates, UK businesses have consistently struggled with customers and clients who pay beyond agreed terms. The issue has worsened since 2022 as rising input costs squeezed margins across sectors, leaving more businesses using their suppliers as an informal source of credit by delaying payments.
The statutory framework exists to protect creditors. The Late Payment of Commercial Debts (Interest) Act 1998 gives businesses the right to charge interest at 8 percentage points above the Bank of England base rate, currently 4.50% following the March 2026 decision, plus fixed debt recovery costs of between £40 and £100. In practice, most small businesses do not exercise these rights for fear of damaging commercial relationships.
The Payment Practices Reporting regime, introduced in 2017 and strengthened by Procurement Policy Note 02/24, requires large companies to publish their payment performance twice yearly. Compliance has improved disclosure but has not yet produced the step change in actual payment behaviour that policy makers intended. The Small Business Commissioner continues to receive and investigate complaints, though formal enforcement powers remain limited.
For many SMEs, invoice finance is the most practical response to late payment risk. Rather than waiting 60 or 90 days for a customer to pay, a business can advance up to 90% of the invoice value within 24 hours through a facility. UK Finance data shows that demand has risen steadily, with over 44,000 businesses now using some form of invoice finance or asset-based lending. The correlation between rising late payment complaint volumes and growing invoice finance take-up is consistent and well documented.
FAQs
What is the legal interest rate I can charge on a late B2B invoice in the UK?
Under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge interest at 8 percentage points above the Bank of England base rate. With the base rate at 4.50% as of March 2026, the applicable rate is 12.50% per annum. You can also claim fixed debt recovery costs of £40 on invoices under £1,000, £70 on invoices between £1,000 and £9,999, and £100 on invoices of £10,000 or more.
What is Payment Practices Reporting and does it apply to my business?
Payment Practices Reporting (PPR) requires large UK companies, broadly those meeting two of the three criteria of 250-plus employees, £36m-plus turnover, or £18m-plus balance sheet total, to publish data on how quickly they pay suppliers. Reports must be filed every six months via the government portal. The data is publicly searchable, allowing suppliers to assess a potential customer's payment behaviour before agreeing terms.
Which UK sectors have the worst late payment records?
Construction consistently records the highest rate of late payment, with average actual payment times of around 61 days against typical 30-day terms. Retail, transport and logistics, and manufacturing also show above-average late payment rates. Professional services and financial services tend to pay more promptly, though significant variation exists within each sector.
Can invoice finance help protect my business against late payment?
Yes. Invoice finance, whether through factoring or invoice discounting, allows you to unlock the cash tied up in unpaid invoices without waiting for your customer to pay. Most facilities advance between 80% and 90% of the invoice face value within 24 to 48 hours of the invoice being raised. This means your working capital is not dependent on your customer meeting their payment terms. Some facilities also include bad debt protection, which covers you if the customer fails to pay at all.
What is the Small Business Commissioner and how can they help with late payment?
The Small Business Commissioner is an independent UK government body set up under the Enterprise Act 2016 to support small businesses dealing with payment disputes with larger businesses. If you are a small business owed money by a larger business, you can submit a complaint to the Commissioner's office free of charge. The Commissioner can investigate and make recommendations, though formal enforcement powers are currently limited. Contact details and the complaint form are available at smallbusinesscommissioner.gov.uk.
Director, Market Invoice
Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.
Last reviewed: 28 April 2026