UK SME Insolvency and Invoice Finance Demand Statistics 2026
UK company insolvencies reached their highest level in over three decades in 2023 before remaining elevated through 2024 and 2025. Invoice finance facilities outstanding stood at £22.7bn in 2025. Around 1 in 5 UK SMEs cite cash flow as a primary business risk. These figures underline how working capital pressure and insolvency risk remain closely linked across the UK small business landscape.
Key statistics
Total company insolvencies registered in England and Wales in 2023, the highest annual total since 1993. Source: The Insolvency Service
Total company insolvencies registered in England and Wales in 2024. Source: The Insolvency Service
Total UK invoice finance and asset-based lending advances outstanding in 2025. Source: UK Finance
UK businesses supported by invoice finance and asset-based lending facilities in 2024. Source: UK Finance
Proportion of UK SMEs identifying cash flow as a primary business risk in 2024. Source: Federation of Small Businesses
Estimated average amount owed to a UK SME in late payments at any one time. Source: Federation of Small Businesses
Estimated number of UK businesses that close each year due to late payment. Source: Federation of Small Businesses
Year-on-year increase in creditors voluntary liquidations in England and Wales in 2024. Source: The Insolvency Service
Share of all 2024 company insolvencies in England and Wales that were creditors voluntary liquidations. Source: The Insolvency Service
Statutory payment term under the Late Payment of Commercial Debts (Interest) Act 1998 where no contract term is agreed. Source: GOV.UK
Average additional days beyond agreed terms that UK SMBs waited for payment in 2023. Source: Pay.UK
Estimated cost of late payment to the UK economy annually. Source: Federation of Small Businesses
Bank of England base rate as of 18 December 2025, affecting invoice discount charge margins for UK borrowers. Source: Bank of England
Approximate average invoice finance facility rate above base rate reported for SME clients in 2024. Source: UK Finance
Construction sector company insolvencies in England and Wales in 2024, the highest of any single sector. Source: The Insolvency Service
Year-on-year growth in invoice finance facilities taken up by SMEs with turnover under £5m in 2024. Source: UK Finance
Total number of SMEs in the UK as of 2024, representing 99.9% of all businesses. Source: Department for Business and Trade
Proportion of SME insolvencies where directors reported insufficient working capital as a contributing factor in 2023. Source: The Insolvency Service
| Metric | Value | Source |
|---|---|---|
| Total company insolvencies registered in England and Wales in 2023, the highest annual total since 1993 | 25,163 | The Insolvency Service |
| Total company insolvencies registered in England and Wales in 2024 | 23,872 | The Insolvency Service |
| Total UK invoice finance and asset-based lending advances outstanding in 2025 | £22.7bn | UK Finance |
| UK businesses supported by invoice finance and asset-based lending facilities in 2024 | 47,000+ | UK Finance |
| Proportion of UK SMEs identifying cash flow as a primary business risk in 2024 | 20% | Federation of Small Businesses |
| Estimated average amount owed to a UK SME in late payments at any one time | £22,000 | Federation of Small Businesses |
| Estimated number of UK businesses that close each year due to late payment | 50,000 | Federation of Small Businesses |
| Year-on-year increase in creditors voluntary liquidations in England and Wales in 2024 | 4.3% | The Insolvency Service |
| Share of all 2024 company insolvencies in England and Wales that were creditors voluntary liquidations | 79% | The Insolvency Service |
| Statutory payment term under the Late Payment of Commercial Debts (Interest) Act 1998 where no contract term is agreed | 30 days | GOV.UK |
| Average additional days beyond agreed terms that UK SMBs waited for payment in 2023 | 27.6 days | Pay.UK |
| Estimated cost of late payment to the UK economy annually | £1.6bn | Federation of Small Businesses |
| Bank of England base rate as of 18 December 2025, affecting invoice discount charge margins for UK borrowers | 3.75% | Bank of England |
| Approximate average invoice finance facility rate above base rate reported for SME clients in 2024 | 5.5% | UK Finance |
| Construction sector company insolvencies in England and Wales in 2024, the highest of any single sector | 3,780 | The Insolvency Service |
| Year-on-year growth in invoice finance facilities taken up by SMEs with turnover under £5m in 2024 | 12% | UK Finance |
| Total number of SMEs in the UK as of 2024, representing 99.9% of all businesses | 5.5 million | Department for Business and Trade |
| Proportion of SME insolvencies where directors reported insufficient working capital as a contributing factor in 2023 | 61% | The Insolvency Service |
Source: The Insolvency Service, UK Finance, Federation of Small Businesses, GOV.UK, Pay.UK, Bank of England
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### UK SME Insolvency and Invoice Finance Demand Statistics 2026: key figures | Metric | Value | Source | | --- | --- | --- | | Total company insolvencies registered in England and Wales in 2023, the highest annual total since 1993 | 25,163 | The Insolvency Service | | Total company insolvencies registered in England and Wales in 2024 | 23,872 | The Insolvency Service | | Total UK invoice finance and asset-based lending advances outstanding in 2025 | £22.7bn | UK Finance | | UK businesses supported by invoice finance and asset-based lending facilities in 2024 | 47,000+ | UK Finance | | Proportion of UK SMEs identifying cash flow as a primary business risk in 2024 | 20% | Federation of Small Businesses | | Estimated average amount owed to a UK SME in late payments at any one time | £22,000 | Federation of Small Businesses | | Estimated number of UK businesses that close each year due to late payment | 50,000 | Federation of Small Businesses | | Year-on-year increase in creditors voluntary liquidations in England and Wales in 2024 | 4.3% | The Insolvency Service | | Share of all 2024 company insolvencies in England and Wales that were creditors voluntary liquidations | 79% | The Insolvency Service | | Statutory payment term under the Late Payment of Commercial Debts (Interest) Act 1998 where no contract term is agreed | 30 days | GOV.UK | | Average additional days beyond agreed terms that UK SMBs waited for payment in 2023 | 27.6 days | Pay.UK | | Estimated cost of late payment to the UK economy annually | £1.6bn | Federation of Small Businesses | | Bank of England base rate as of 18 December 2025, affecting invoice discount charge margins for UK borrowers | 3.75% | Bank of England | | Approximate average invoice finance facility rate above base rate reported for SME clients in 2024 | 5.5% | UK Finance | | Construction sector company insolvencies in England and Wales in 2024, the highest of any single sector | 3,780 | The Insolvency Service | | Year-on-year growth in invoice finance facilities taken up by SMEs with turnover under £5m in 2024 | 12% | UK Finance | | Total number of SMEs in the UK as of 2024, representing 99.9% of all businesses | 5.5 million | Department for Business and Trade | | Proportion of SME insolvencies where directors reported insufficient working capital as a contributing factor in 2023 | 61% | The Insolvency Service | Source: The Insolvency Service, UK Finance, Federation of Small Businesses, GOV.UK, Pay.UK, Bank of England
“Rising insolvency and rising invoice finance uptake move together here, but the data cannot show which way the causation runs: distressed firms seek funding, and some funded firms still fail. The record 2023 insolvency total also partly reflects the unwinding of Covid-era support and a larger company register, not purely deteriorating trading conditions.”
What the numbers mean
UK company insolvency volumes remained at historically elevated levels through 2024 and into 2025, following the peak recorded in 2023. The end of post-pandemic government support schemes, the withdrawal of HMRC forbearance, and sustained cost pressure from energy, wages, and input costs all contributed. Creditors voluntary liquidations made up the vast majority of cases, reflecting directors choosing to wind down rather than face compulsory action, often once working capital had been exhausted.
Invoice finance acts as a direct counterweight to this pressure. By unlocking cash tied up in unpaid invoices, facilities allow businesses to meet payroll, honour supplier terms, and invest without waiting 30, 60, or even 90 days for customers to settle. The 12 percent growth in uptake among smaller SMEs in 2024 suggests that awareness of the product is broadening, particularly among businesses that would previously have relied on overdrafts or directors loans.
The connection between late payment and insolvency is well documented. The Federation of Small Businesses estimates that 50,000 businesses close each year in the UK as a direct consequence of late payment. Construction, which recorded the highest sector insolvency count in 2024, is also the sector most associated with extended payment terms and retentions. Transport and staffing businesses face similar dynamics, with payroll obligations arising weekly while client invoices may not be settled for 60 days or more.
With the BoE base rate at 4.50 percent as of December 2025, the cost of invoice finance remains material but is broadly stable. For businesses weighing the cost of a facility against the risk of insolvency, the calculus is often straightforward.
FAQs
Is there a proven link between late payment and UK business insolvency?
Yes. The Federation of Small Businesses estimates that late payment contributes to around 50,000 UK business closures each year. The Insolvency Service data for 2023 showed that 61 percent of SME directors cited insufficient working capital as a factor in their company's failure. Cash flow problems arising from slow-paying customers are widely regarded as one of the most common proximate causes of insolvency.
How does invoice finance help reduce insolvency risk for SMEs?
Invoice finance converts unpaid sales invoices into immediate cash, typically releasing 80 to 90 percent of the invoice value within 24 to 48 hours of raising the invoice. This removes the gap between delivering goods or services and receiving payment, allowing businesses to meet payroll, pay suppliers, and service other obligations without taking on new debt. It can be particularly effective during periods of rapid growth, when cash tied up in debtors can otherwise outpace available reserves.
Which UK sectors had the highest insolvency rates in 2024?
Construction recorded the highest number of company insolvencies in England and Wales in 2024, with 3,780 cases. The wholesale and retail trade, accommodation and food services, and transport sectors also recorded high volumes. These sectors share common characteristics including thin margins, long payment chains, and reliance on trade credit, all of which increase vulnerability to cash flow disruption.
How has the Bank of England base rate affected invoice finance costs?
Invoice finance pricing is typically structured as a service fee plus a discount charge linked to the base rate. With the BoE base rate at 3.75 percent as of 18 December 2025, the total cost of a facility for a typical SME borrower sits in the range of 7 to 10 percent on an annualised basis, depending on turnover, debtor quality, and facility size. This is broadly comparable to or lower than unsecured overdraft rates, and the facility is secured against receivables rather than personal assets.
Where can UK SMEs find data on insolvency trends and invoice finance market size?
The Insolvency Service publishes quarterly and annual statistics on company insolvencies in England and Wales at gov.uk. UK Finance publishes an annual asset-based lending and invoice finance dataset covering advances outstanding, number of clients, and sector breakdowns at ukfinance.org.uk. The Federation of Small Businesses publishes research on late payment and its economic impact at fsb.org.uk. These are the primary citable sources for UK market data in this area.
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: 17 June 2026