Key facts
- Late payments are costing the UK economy an estimated £11 billion per year.
- SMEs are waiting an average of 27 days for payment.
- Nearly half (49%) of SME invoices are paid late.
- Cashflow issues are preventing SMEs from investing in technology and digital transformation.
- UK SMEs experienced profit growth of 7.4% in the year to Q1 2026.
Late payments are costing the UK economy an estimated £11 billion annually, with small and medium-sized enterprises (SMEs) facing significant delays in receiving payments, averaging 27 days after issuing an invoice. Research from Sage indicates that 49% of SME invoices are paid late, creating cashflow blockages that hinder investment in crucial areas like new technologies and digital transformation.
This situation arises as the government pushes its Late Payments Bill through Parliament and aims to boost productivity and digital adoption among smaller businesses. Despite the financial pressures, the UK's small business sector has shown resilience, with profits growing 7.4% and real revenues increasing by 3.2% in the year to the first quarter of 2026. However, business groups argue that improved payment practices could unlock substantially more investment and growth.
The adoption of artificial intelligence by SMEs remains low, with only 21% using it regularly and 6% embedding it into daily operations. Cost is the primary barrier for AI adoption, cited by 53% of firms, followed by skills shortages and data privacy concerns. The government is looking to e-invoicing, set to be introduced from 2029, as a potential solution, as businesses using this system typically receive payments five to seven days faster.