Late payments are forcing thousands of UK businesses to the wall every year, new analysis reveals.
Funding Circle’s study, combined with Small Business Commissioner research, shows that unpaid invoices are costing the UK economy almost £11 billion annually — and driving an estimated 3,050 SMEs to shut their doors each year.
Across the country, small and micro businesses are hit hardest. Over 1.5 million firms are affected by late payments, waiting on an average of £17,000 per company that could have been used to pay staff, invest, or keep operations running. For micro businesses, late payments eat up 4.61% of annual turnover, putting them on the brink of collapse.
London worst hit: Around 3,000 firms in the capital closed in 2024 due to unpaid invoices, with the South East, North West, and East of England also facing serious losses. The construction sector tops the list, with over 2,100 firms shuttered last year because of delayed payments, followed by professional services, wholesale and retail, and administrative support.
The hidden costs don’t stop at cash flow. UK businesses waste an estimated 133 million staff hours each year chasing overdue invoices — a £7 billion drain in labour costs, legal fees, and emergency financing.
The report warns that reducing late payments by just 10% could inject nearly £1 billion into the economy, saving firms, protecting jobs, and boosting growth.
Lisa Jacobs, CEO at Funding Circle said, “At Funding Circle, we back small businesses, and that commitment extends beyond the finance we provide – it’s built into how we operate as a business. Securing the Silver Fair Payment Code accreditation demonstrates our deep commitment to supporting SMEs. We know how much timely payment matters to our suppliers, many of whom are small businesses. We’re proud to lead by example in the UK Fintech sector.”
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