SME Insights Report: UK small businesses owed £32bn in late payments

Late payments are a consistent issue for small business owners and our research reveals the scale of the problem. Data from our SME Insights Report reveals UK small business owners are owed a staggering £32.1 billion in late payments.

The SME Insights Report is an annual study of challenges and trends in the UK’s small business sector. The report shines a light on the issue of late payment, barriers to growth, areas for support, and more.

Download the full report and discover the key findings.

Late payment piles on the pressure

Most small business owners will have experienced late payment in some form but that shouldn’t diminish its impact on SMEs. A steady cash flow is usually a priority for business owners but sometimes that comes at a cost.

With 30 per cent of businesses owed as much as £45,000 at one time, SMEs are going without. It’s easy to see how much of a difference it makes when 13 percent of late payments take more than 21 days to settle.

Our research shows over a quarter of small business owners are considering using personal savings to prop up their business while nearly a third of businesses are seeking bank loans.

When SMEs are exposed to the volatility of the economy, late payments add unnecessary pressure to an already strained sector.

What are the challenges of running a business in 2023?

In a year where costs have skyrocketed while consumer spending has decreased, it’s not surprising that 48 per cent of SME owners point towards the cost of living crisis as a major issue for their business.

But it isn’t the only factor in what’s been a difficult year for SMEs. Some of the key challenges are:

• rising energy costs – 43 per cent of SMEs are spending between 21 and 60 per cent more on their monthly energy bill than last year
• late payment – late payment continues to be a problem for 64 per cent of small business owners
• inflation – 32 per cent shared that rising interest rates and inflation are a significant challenge for their business in 2023
• tax – high taxes are proving are a concern for 31 per cent of the SMEs  
• consumer trends – finding and retaining customers is a significant issue for 26 per cent of SMEs

Optimism in adversity

Years of difficult circumstances have made SMEs resilient to a variety of challenges. Despite facing unprecedented energy bills combined with interest rates at a 14-year high – small business owners remain optimistic about their future.

A deep dive into the UK’s small business landscape

We surveyed over 1,000 business owners at all phases of their growth, from start-up sole traders to mature businesses with 10+ employees.

From the common challenges, barriers to growth, and future plans – this report is a detailed analysis of what it’s like to be a small business owner in 2023.

Watch the video to see the key findings from our report.

Insight from Baroness Karren Brady CBE

Our Small Business Ambassador, Baroness Karren Brady CBE, is a vocal supporter of UK SMEs and provided her insight on the report.

“Small businesses are the heartbeat of our economy. They fuel innovation, create jobs, and will play an essential role in the UK’s economic recovery. This report provides a clear insight into today’s small business landscape.”, she said.

Analysis from leading economist

Our data has been analysed by Professor Jonathan Portes of King’s College London, an expert on economics and public policy. He offered his perspective on what the report could mean for the UK economy:

“Given the importance of SMEs to the overall economy, this should give some cause for – very cautious – relative optimism about the UK’s economic prospects over the next year.”

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• UK government launches enquiry into SME funding challenges
• Upcoming alcohol duty changes in 2023
• What is public liability insurance?

Have you struggled with late payments? Let us know in the comments below.