3 in 4 SMEs are owed money by late paying customers

As the new Small Business Commissioner starts her first day at work[i], a survey of SME business owners and managers[ii] has found that 3 in 4 (77%) businesses are owed money from their late paying customers. Emma Jones, CBE is set to take a leading role in tackling late payments and unfair payment practices.

On average, SMEs with 10 or more employees across the UK are each currently owed £18k-£22K in unpaid invoices according to the survey by Purbeck Insurance Services, the UK’s only provider of personal guarantee insurance to business owners.  The findings show that late payment remains a persistent, systemic problem affecting tens of thousands of small companies.

Bigger SMEs bear the brunt as late payments exceed £22k

As SMEs await the outcome of the Government’s consultation focused on strengthening rules around late payments and long payment terms[iii], Purbeck’s survey suggests bigger SMEs with 100-249 employees have the biggest late payment problem. These firms are typically owed £22,102. Not far behind though, companies with 10-49 employees have on average late payments amounting to £20,973 – a sizeable dent in the cashflow of these smaller firms. In contrast, micro businesses of 1-9 employees typically face £8,441 in unpaid invoices.

Late payment is harming 60% of SMEs

60% of the SMEs surveyed believe late payment is impacting their business. Understandably, the firms with 100-249 employees feel they are suffering the most with 3 in 4 (74%) of SMEs of this size saying late payment is having a significant or slight effect on their business.

Regional Differences

Regionally, the late payment problem varies considerably according to the survey. Firms in the West Midlands, Scotland and Greater London are all owed over £21,000 while firms in Wales (£10,813), the South West (£12182), Yorkshire and Humber (£12540) have much lower volumes of late payments.

Gender Late Payment Gap

Interestingly, the survey found that male owners/managers of SMEs reported higher levels of late payments than female owner/managers. Male SME business owners typically have 17,997.41 owing to them compared to female business owner/managers who are owed on average £15,592.

Todd Davison, MD of Purbeck Insurance Services said: “It is little wonder that ‘working capital’ is the main reason SMEs are taking personal guarantee backed loans currently, according to our data.  They are effectively bank rolling their customers.  It’s not fair and it’s not right.  The outcome of the Government’s consultation could not come soon enough.  This should be a top priority for Emma Jones as she begins work as Small Business Commissioner.  In the meantime it remains vital for SMEs to keep on top of invoices, chasing payments as soon as they are 2 or 3 days overdue and consider exercising their legal rights by charging interest on overdue invoices and charging late payment fees.  Ultimately, every business has seen their costs rise. Using a supplier to buoy up your own finances is both unethical and hugely damaging to our SME community.”

[i] https://www.gov.uk/government/news/government-appoints-emma-jones-cbe-as-new-small-business-commissioner-to-help-tackle-late-payments?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=c30039a9-e23e-4afd-87a5-e16bb6d9c72e&utm_content=daily

[ii] Survey of 500 SME business decision makers, February 2025, by Censuswide

[iii] https://questions-statements.parliament.uk/written-statements/detail/2024-10-07/hcws106